Moderating Role of Managerial Ownership on the Effect of Cash Conversion Cycle and Receivable to Payable ratio on Firm Performance in Listed Industrial and Consumer Goods Companies in Nigeria

Abstract

Cash management is an essential requirement for an organization to stay afloat. The liquidity position of such business entity can determine how it is being treated in the marketplace. Therefore, ensuring a shorter time lag between when credits are given and when they are converted back to cash is very important in working capital management. Receivable to payable ratio addresses the number of days a company will allow its money with customers in relation to what is allowed by the supplier. The purpose of this research was to investigate the relevance of accounts receivable and accounts payable management in publicly traded Nigerian firms engaged in manufacturing and retailing consumer and industrial goods. The sample of 26 listed Nigerian industrial and consumer goods businesses is from the Nigerian Exchange Group (NGX), and the data spans the years 2011 to 2021. The study utilized a correlation review and a multiple regression model to analyze the study's variables and their relationships post hoc. Researchers found that the correlation between the accounts receivable to accounts payable ratio and ROA was significantly tempered by the degree of ownership concentration. This suggests that the beneficial effect of the receivables-to-payments ratio on financial performance is mitigated by the degree to which ownership is concentrated. Instead, a slowed cash conversion cycle due to high ownership concentration has a favourable and negligible impact on financial results. The report suggests, among other things, that the management of listed consumer and industrial products firms in Nigeria cultivate a long-term connection with their suppliers to gain access to trade finance in a more convenient, swift manner, which would improve the companies' performance. The management should further put in place a very vibrant credit policy to help avoid any occurrence of poor account receivables.