WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF THEudMANUFACTURING SECTOR: AN EMPIRICAL INVESTIGATION OF NESTLE NIGERIAudPLC AND CADBURY NIGERIA PLC

摘要

Working capital management is very fundamental toudthe liquidity and profitability of any organisation andudthe two variables are vital in evaluating theudperformance and ultimately deciding the survival of anyudorganisation. This study presents an empirical investigation ofudthe relationship between working capital management andudprofitability using Nestle Nigeria Plc and Cadbury Nigeria Plc asudcase studies. The study used correlation and regression analysisudto analyse data. Quick ratio was used to measure liquidity,udcurrent ratio, trade receivable collection and trade payablesudpayment periods were used as efficiency variables to capture theudworking capital management policy adopted by these companiesudwhile return on equity was used as the profitability variable.udLiquidity and efficiency variables were correlated against returnudon equity. The study found a negative relationship between theudliquidity, two of the efficiency ratios and return on equity forudNestle Nigeria Plc while it found a positive relationship betweenudthe liquidity, efficiency ratios and return on equity of CadburyudNigeria Plc. To enhance profitable short-term investments, theudstudy recommends that companies should manage their workingudcapital efficiently by upgrading the quality of their assets whileudobsolete inventories should be written off.