Liquidity Management and Business Performance of Listed Non-Financial Firms in Nigerian

Abstract

The aim of this research is to investigate the relationship between liquidity management and performance, with profitability as the metric for performance, of firms listed on the Nigerian Stock Exchange (NSE) for the period 2013 to 2020. The study utilizes a fixed effect panel data approach and includes a sample of firms listed on the main board of the consumer goods sector of the NSE.The results reveal an insignificant negative correlation between the profitability of the listed firms and their Gearing Ratio, Average Collection Period, and Inventory Turnover Period. However, a non-significant positive correlation was observed between profitability and the Current Ratio, Average Payment Period, Cash Conversion Cycle, and Firm Size. This study is unique in that it is the first to focus primarily on firms listed on the main board of the consumer goods sector of the Nigeria Stock Exchange and it employs a robust test for potential endogeneity issues. Furthermore, to ensure the reliability and validity of the model, several diagnostic tests including normality test, multicollinearity test, heteroscedasticity test, autocorrelation test, and appropriate model selection test have been conducted.