Cash Management Strategies and Financial Performance of Selected Quoted Industrial Goods Companies in Nigeria

• Author(s): Stella Peter ESSIEN ; Usen Paul UMO
• Paper ID: 1705047
• Page: 146-167
• Published Date: 16-09-2023
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 7 Issue 3 September-2023

Abstract

Owing to seasonality and uncertainty, managers of industrial goods companies focus on core business issues and overlook some potentially serious and costly issues relating to poor cash management strategies (skills) and poor understanding of the cash flow cycle. This dissertation work examined cash management strategies and financial performance of manufacturing companies, using ten (10) quoted industrial goods companies listed in Nigeria Exchange Group from 2017-2021. In this study, cash balances, cash conversion cycle, and cash turnover are the cash management strategies proxies employed to examine their effect on financial performance. Financial performance is measured in terms of return on assets. The data was analysed using Ordinary Least Square (OLS) regression. It used ex post facto research design. The major findings of this study showed that cash balances strategy had a beta coefficient of 0.124.Highlight of the dissertation work revealed that the cash balances strategy insignificantly affects financial performance in the industrial goods companies in Nigeria. The result of the analysis revealed that cash conversion strategy had a beta coefficient of 0.118. This implies that the cash conversion strategy insignificantly affects financial performance in the industrial goods companies in Nigeria. From the result of the analysis also cash turnover strategy had a beta coefficient of 0.707. Accordingly, cash turnover strategy significantly affects financial performance of industrial goods companies in Nigeria. It was therefore concluded that cash management strategies jointly influence financial performance of industrial goods companies in Nigeria. Secondly, the cash balances and cash conversion strategies have insignificant influence on financial performance of industrial goods firms in Nigeria. Thirdly, cash turnover has significant positive influence on financial performance of industrial goods firms in Nigeria. It was recommended that the management of the industrial firms should reduce their cash balances as it insignificantly affects financial performance. More so the management of the industrial goods firms should improve on their cash conversion cycle as this affects financial performance and accept to increase their cash turnover as this will positively affect financial performance.

Keywords

Cash Management Strategies, Financial Performance, Quoted Industrial Goods Companies, Nigeria.

Citations

IRE Journals:
Stella Peter ESSIEN , Usen Paul UMO "Cash Management Strategies and Financial Performance of Selected Quoted Industrial Goods Companies in Nigeria" Iconic Research And Engineering Journals Volume 7 Issue 3 2023 Page 146-167

IEEE:
Stella Peter ESSIEN , Usen Paul UMO "Cash Management Strategies and Financial Performance of Selected Quoted Industrial Goods Companies in Nigeria" Iconic Research And Engineering Journals, 7(3)