WORKING CAPITAL AND PRODUCTIVITY IN NIGERIAN MANUFACTURING FIRM: PANEL-CAUSALITY MODEL APPROACH

Abstract

This study examines the influence of working capital management on productivity in the Nigerian manufacturing sector. It investigates the relationship between various working capital management variables such as cash conversion cycle, debtors' collection period, credit payment period, current ratio, and firm size, and their impact on return on assets and return on equity. Using secondary data from 13 firms listed on the Nigerian Stock Exchange over a period from 2013 to 2023, the study applies panel regression models and Granger causality tests. The results reveal that cash conversion cycle and debtors' collection period positively affect return on assets, while current ratio negatively impacts return on assets. The study concludes that efficient working capital management is crucial for enhancing productivity in the sector. Policy recommendations include the need for firms to optimize their working capital management practices to improve performance and competitiveness, particularly through improved receivables management and liquidity control.

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