Effect of Working Capital Management on Financial Performance of Quoted Conglomerate Firms in Nigeria

This study examined the effect of working capital management (WCM) on the financial performance of quoted conglomerate firms in Nigeria for the period 2006 to 2016. Account receivable period (ARP), account payable period (APP), inventory turnover period (INV) and cash conversion cycle (CCC) were adopted as the proxies for WCM while return on equity (ROE), return on assets (ROA) and return on investments (ROI) were adopted as proxies for financial performance. Secondary data were obtained from ten (10) quoted conglomerate firms' financial statements and Structural Equation Modeling (SEM) was used for the analysis. The study reveals that APP and CCC have positive effect on financial performance; while ARP and INV have negative effect on financial performance. The general result indicates that there is significant effect of WCM on financial performance (ROA, ROE and ROI) of quoted conglomerate firms in Nigeria. It is recommended that the companies should; ensure speedy collections of account receivables; increase account payable period; formulate and implement effective strategies for inventory management system that minimizes inventory turnover period and management should ensure that investments in working capital is optimized by reducing the length of time from the actual outlay of cash for purchases until the collection of receivables resulting from the sales of goods or services