Working Capital Management and Firm Value of Listed Consumer Goods Firms in Nigeria

Abstract

Purpose: Working capital management is critical to the liquidity, operational continuity and market value of consumer goods firms. However, Nigerian evidence remains mixed and frequently emphasises accounting profitability rather than market-based value. This study examined the associations of accounts receivable period (ARP), accounts payable period (APP) and cash conversion cycle (CCC) with the firm value of listed consumer goods firms in Nigeria. Methodology: The study adopted an ex post facto research design. Secondary data were obtained from the audited annual reports and Nigerian Exchange records of 10 firms covering 2015–2024, producing 100 firm-year observations. Firm value was measured as the financial-year-end market value of ordinary equity divided by total assets, and its natural logarithm was used in the regression analysis. The data were analysed using descriptive statistics, diagnostic tests, Pearson correlation and random-effects panel regression with EViews 9. Findings: The findings revealed that ln(ARP) had a positive and significant association with ln(FV) (β = 0.377, p = .004), while ln(APP) had a negative and significant association with ln(FV) (β = −0.471, p = .015). CCC had a negative but insignificant association with ln(FV) (β = −0.000126, p = .908). The model was jointly significant (F = 11.226, p < .001) and explained approximately 26.0% of the variation in ln(FV). Unique Contribution to Theory, Practice and Policy: The study reinforces the liquidity–value trade-off perspective by demonstrating that the value implications of working capital depend more on its components than on the aggregate cash cycle. It recommends selective customer-credit management, payment discipline within negotiated supplier terms and component-level evaluation of CCC. It also supports improved working capital disclosures by listed firms to enhance investor assessment and market discipline