Liquidity Management and Profit Performance of Pharmaceutical Manufacturing Firms Listed in Nigeria Stock Exchange

This study examined the impact of liquidity ratios on the profitability of pharmaceutical companies that are quoted on Nigeria stock exchange. Manufacturing companies were chosen based on the fact that they are very crucial to the development of adequate and proper healthy conditions for the nation and needs to be viable in their operations to satisfy the public expectations from them. The variables studied are the liquidity ratio, the debt ratio, the receivable ratio, and the sales growth ratio. The researchers used only secondary sources of data. The data were extracted from the annual report and financial statements of selected manufacturing pharmaceutical entities in Nigeria covering the period 2000 to 2011. The date was analyzed and the hypotheses were tested using multiple regression analytical tools. The findings show that the liquidity ratio and profitability of the companies' studies are significantly and positively related. The debt ratio and the sales growth ratio have a positive but not significant impact on profitability of the firms. The receivable ratio has a negative impact on the profitability but the relationship is not significant. The study then recommended that the companies should engage experts in the management of their receivables, or train and retrain their managers on management of liquidity. They should also intensify efforts in the collection of debts from customers. Debt collector's services can be obtained from consultants who are experts in the field. Realizing that unhealthy competition can affect the working capital position of firms, the study equally recommended that the government should take action towards regulating these businesses to avoid some growing companies falling into liquidity difficulty as a result of the competition