AN ASSESSMENT OF WORKING CAPITAL MANAGEMENT AS A TOOL FOR COST REDUCTION AND PERFORMANCE IMPROVEMENT OF LISTED MANUFACTURING FIRMS IN NIGERIA

ABSTRACT The study examined how publicly listed manufacturing companies in Nigeria can reduce costs and improve their performance through their working capital management practices. The researchers utilized an ex post facto research design which involved collecting secondary data from the annual reports of 19 manufacturing companies listed on the Nigerian Exchange Group between 2018 and 2024. The study measured working capital management through current ratio quick ratio inventory turnover average collection period average payment period and cash conversion cycle (CCC) while firm performance was evaluated using return on assets (ROA) return on equity (ROE) and net profit margin (NPM). The study used cost of sales and operating expenses ratios to measure cost efficiency. The research team employed SPSS (version 25) to conduct data analysis through descriptive statistics Pearson correlation and multiple regression analysis techniques. The results showed through trend and descriptive data that working capital efficiency improved throughout the research period. The cash conversion cycle experienced a significant decline which decreased from approximately 59 days in 2018 to about 56 days in 2024. The decline in CCC coincided with profitability metrics which showed average ROA rising from approximately 10.5% in 2018 to 12.0% in 2024 and ROE growing from 15.8% to 18.0% during the same period. The correlation results showed that CCC had a strong negative relationship with ROA ROE and NPM performance indicators which indicates that shorter cash conversion cycles lead to greater company profitability. The study confirmed that inventory turnover and liquidity ratios positively impacted performance while extended receivables durations decreased profitability. The study confirmed that WCM efficiency improvements brought about decreased cost-of-sales ratios and operating expense ratios which resulted in better WCM efficiency. The research shows that working capital management leads to better financial results and reduced operational costs for all publicly traded manufacturing businesses in Nigeria. The study recommends that managers use cash conversion cycle reduction strategies and inventory turnover improvement methods and receivables management enhancement techniques to achieve better profitability results and sustained corporate performance. ABSTRACT The study examined how publicly listed manufacturing companies in Nigeria can reduce costs and improve their performance through their working capital management practices. The researchers utilized an ex post facto research design which involved collecting secondary data from the annual reports of 19 manufacturing companies listed on the Nigerian Exchange Group between 2018 and 2024. The study measured working capital management through current ratio quick ratio inventory turnover average collection period average payment period and cash conversion cycle (CCC) while firm performance was evaluated using return on assets (ROA) return on equity (ROE) and net profit margin (NPM). The study used cost of sales and operating expenses ratios to measure cost efficiency. The research team employed SPSS (version 25) to conduct data analysis through descriptive statistics Pearson correlation and multiple regression analysis techniques. The results showed through trend and descriptive data that working capital efficiency improved throughout the research period. The cash conversion cycle experienced a significant decline which decreased from approximately 59 days in 2018 to about 56 days in 2024. The decline in CCC coincided with profitability metrics which showed average ROA rising from approximately 10.5% in 2018 to 12.0% in 2024 and ROE growing from 15.8% to 18.0% during the same period. The correlation results showed that CCC had a strong negative relationship with ROA ROE and NPM performance indicators which indicates that shorter cash conversion cycles lead to greater company profitability. The study confirmed that inventory turnover and liquidity ratios positively impacted performance while extended receivables durations decreased profitability. The study confirmed that WCM efficiency improvements brought about decreased cost-of-sales ratios and operating expense ratios which resulted in better WCM efficiency. The research shows that working capital management leads to better financial results and reduced operational costs for all publicly traded manufacturing businesses in Nigeria. The study recommends that managers use cash conversion cycle reduction strategies and inventory turnover improvement methods and receivables management enhancement techniques to achieve better profitability results and sustained corporate performance.