A study of working capital management as a measure of performance in manufacturing industries in Nigeria

Abstract

This study investigates Working Capital Management in some Manufacturing Industries in Nigeria from 2007 to 2011. National Salt Company of Nigeria Plc, Cadbury Nigeria Plc, Flour Mills of Nigeria Plc, Dangote Flour Mills Plc, Honeywell Flour Mills Plc, Dangote Sugar Refinery Plc, UTC Nigeria Plc, Guinness Nigeria Plc, Nestle Nigeria Plc and Seven-Up Bottling Company Plc represent the sample for the study. For the existence and continuity of any organization, the working Capital Management must be well monitored. The study used secondary source of information to collect data. The ratios relating to working Capital Management were computed and ratio analysis was used to measure the performance of the ten organizations. The findings confirm that working capital management has effect on the profitability of an organization. It was observed that the organizations with good working capital management recorded profit while the organizations with poor working capital management sustained losses. If working Capital can be monitored, it has implication in terms of profitability. The study therefore recommended that working capital components such as current assets, current liabilities, quick assets etc should be critically considered in an organization. The management should insist on ratio analysis at all balance sheet dates because ratio analysis provides more information than just absolute accounting figures.