Working Capital Management Firm Liquidity and Stock Market Seasonality: Evidence from Nigeria (Published)
This study examines the relationship between Working Capital Management Firm Liquidity and Stock Market Seasonality among quoted firms in Nigeria. Six hypotheses were formulated following the dependent variable of Stock Market Liquidity. The independent variables employed for this study include: Liquidity Ratio, Account Payable Day, Account Receivable Day, Inventory Day, Firm Leverage and Firm Size. This study is based on ex-post facto research design and employed a panel data set collected Fifty (50) non-financial companies over an eight year period ranging from 2011 to 2018 financial year. We analyzed the data set using descriptive statistics, correlation and Panel Ordinary Least Square Regression Analysis. Our finding lends credence to the efficient market theory which holds that share markets prices are unpredictable and as such cannot be forecasted. Specifically, the finding suggests that market liquidity cannot predict stock market returns irrespective of the season of the year. Hence, we carefully hold that the stock market in Nigeria is efficient due to its randomness and will rapidly respond to any information or anomalies presented to it. The study recommends among others that policy makers in emerging markets such as Nigeria should ease entry barriers for prospective firms so as to enhance liquidity. The study further recommends that, proper inventory management system should be put in place in order to avoid working capital mismanagement.
Impact of Working Capital Management on Firm’s Profitability: A Case from Food Sector of Pakistan (Published)
The main aim of this study is to investigate the relationship between working capital management (WCM) and firm’s profitability in the Food sector of Pakistan. WCM plays an important role in firm’s financial management decisions. An optimal (WCM) is expected to contribute positively to the creation of firm’s value and enhancement of its profitability. Return on assets (ROA) is used as dependent variable while different independent variables are also used. Working capital, current asset to total asset ratios’ debt to equity ratio, current ratio and capital size of the firm are used independent variables. These variables are also used to investigate their effect on profitability (net income). A sample size of 5 major food companies in Pakistan has been selected from balance sheet analysis of state bank of Pakistan for a period of five years, from 2012 to 2016. The relationship between (WCM) efficiency and profitability is examined using correlation, regression analyses. The results show a strong positive significant relationship between (WCM) and firm’s profitability in Pakistan’s Food sector.
Working Capital Management Antecedents Impact on Firm Specific Factors: A Ten Year Review of Karachi Stock Exchange (Published)
The study aims of investigate relationship of working capital antecedents and profitability of the company. Seven variables are taken as proxy variable to measure working capital and its management. Population of the study is based on Karachi stock exchange listed companies. The sample of study is manufacturing sector of Pakistan. Thus, sample period contains on the ten years from (2005-2014). All variables have sound reliability and data is normally distributed. Therefore, correlation and regression analyses are applied. Hence, study revealed significant relationship of working capital management and profitability.
Assessing the Impact of Liquidity and Profitability Ratios on Growth of Profits in Pharmaceutical Firms in Nigeri (Published)
This paper assesses the impact of liquidity and profitability ratios on growth of profits in Pharmaceutical firms in Nigeria. Eight ratios: acid test, current ratio, net working Capital. Return on assets, returns on capital employed, returns on equity, gross profit ratio and net profit ratio were regressed against the dependent variable growth of profit. Haussmann test was conducted to choose between Fixed Effect and Random Effects model. Results justified the use of Fixed Effect model. Test results indicate significant contributions of all the variables to profit growth of pharmaceutical companies in Nigeria implying that continued improvement in the variables can lead to increases in growth of profit by the Pharmaceutical firms.
The main objective of the study was to find whether financial ratios affect the performance of the companies in the special context of cement industry in Pakistan. This study empirically examines the relationship between working capital management and profitability by using data of 10 Pakistani cement companies listed on Karachi Stock Exchange. The study is based on secondary data collected from financial reports of the sample companies for a period of five years from 2009-2013. The data was analyzed using the techniques of correlation coefficient and multiple regression analysis. All the findings were tested at 0.01 and 0.05 level of significance. We found that the return on equity (ROE) is negatively correlated with the Cash Conversion Cycle (CCC), current ratio (CR), and inventory turnover in days (ITD). While ROE is positively correlated with the Gross Working Capital Turnover (GWCT), Quick Ratio (QR), Average Payment Period (APP), Size of firms (LNSALES), and Funds allocated by government in Public Sector Development Program (LNPSDP). The relationship of Current Ratio is insignificant with ROE, but the relationship is not conclusive.
PARTICIPATION OF INDIGENOUS CONTRACTORS IN NIGERIAN PUBLIC SECTOR CONSTRUCTION PROJECTS AND THEIR CHALLENGES IN MANAGING WORKING CAPITAL (Published)
Over the years, indigenous contractors in Nigeria have recorded a low level of participation and have often been sidelined in large scale construction activities. This has been attributed to, amongst a number of factors, mismanagement of funds and working capital which makes them prone to bankruptcy, with poor project execution and abandonment the likely outcome. The paper thus focused on studying the extent of participation of indigenous contractors in Nigerian construction projects, identifying and examining the most severe factors that hinder effective and efficient working capital management and affect the level or amount of working capital requirement of indigenous contractors. Literature studies, field survey and oral interviews were carried out to determine the major challenges faced by contractors in managing working capital and the extent of indigenous participation in public projects respectively, while a questionnaires were distributed to a selected sample of contractors in Imo state to obtain the severity weight of each factor. Findings revealed that evidently, the common challenges facing Nigerian indigenous contractors in Nigeria in the area of working capital management are low awareness of the need for working capital management, one-man business setbacks, under-capitalization, poor funding and cash flow problems, high cost of construction finance, economic recession, reckless spending and diversion of funds, poor project planning and control. Factors affecting the level of working capital requirements comprises: inflation, delays in interim payments, taxation at source and deduction of retention funds. Indigenous contractors also recorded a low level of participation on major public contracts. Results of the severity ranking exercise indicated that the problems of the one-man business set up is the most severe of the factors hindering proper working capital management, while deduction of retention fund and inflation respectively, ranked highest in factors affecting the level or amount of the contractors’ working capital requirement. It was thus recommended that in order to enable indigenous contractors realize construction projects within pre-planned cost, time and quality, reduce the incidences of project abandonment and improve their overall participation, there is need for concerted efforts on the part of the contractors to take appropriate steps in maximizing their awareness on the gains of proper working management and minimize incidences that will lead to cost escalation of his working capital requirement and on the part of the Government, a focused, political will to devise policies and create the enabling environment for improving indigenous content in the construction industry