Abstract:
This study examines the effect of working capital management on financial performance of
listed industrial firms in Nigeria from 2011 to 2020. Cash conversion cycle, account payable
and account receivable were used to measure working capital management, while return on
assets was used to measure financial performance. The secondary data was from the
individual financial reports of the listed industrial sectors in Nigeria. The study sampled ten
(10) listed industrial firms out the thirteen (13) in Nigeria due to the inaccessibility of data.
The study employed ordinary least square regression to analyse the data. The result showed
that account receivable has a negative significant effect on return on assets, while cash
conversion cycle and account payable were insignificant. The study recommends that
Industrial firms should ensure that inventory is adequate to meet customer demands at all
times while at the same time minimizing the cash conversion cycle of converting inventory to
cash. Also, the management should maintain an adequate period of settling their suppliers in
order to avoid negative effect on the company’s performance. Finally, firms should create a
new strategies and incentives like discount and promo that will ensure that debtors are
encouraged and motivated to settle their accounts on time.
