Liquidity and Working Capital Management Practices on Firm Value of Listed Non-Financial Companies in Nigeria

Abstract

The value of a firm, often represented by its market capitalization, reflects the market’s perception of its future earnings potential, growth prospects, risk profile, and overall financial health. Conversely, poor financial management practices can expose firms to increased risks, reduced profitability, and potential value erosion. This study examined the relationship between liquidity and working capital management practices and the value of listed non-financial companies in Nigeria. To achieve these objectives, ex- post facto research design was employed and the study utilized seventy (70) selected listed non-financial firms that had consistently published their audited annual financial reports from 2011 to 2022, and analyzed the data using panel multiple regression technique with the help of E- view statistical tools. The result of the study revealed that liquidity management practices had negative and insignificant effect on firm value of listed non-financial firms in Nigeria. While working capital management practices had positive and significant effect on price to book value of listed non-financial firms in Nigeria. Based on this finding, it is recommended that the management of non-financial companies in Nigeria should improve on working capital management to balance operational needs with cost considerations and also avoid overstocking or under stocking, which can tie up resources or disrupt operations.