Enhancing Financial Performance in Consumer Goods Manufacturing Firms: A Comprehensive Analysis of Liquidity Management Strategies in Nigeria

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Enhancing Financial Performance in Consumer Goods Manufacturing Firms: A Comprehensive Analysis of Liquidity Management Strategies in Nigeria

Agu, W. N.a, Egiyi, M. A.b, & Ugwu, P. N.c

abDepartment of Accounting, Godfrey Okoye University, Enugu, Nigeria
cEnugu State Polytechnic, Iwollo, Ezeagu, Enugu, Nigeria

­Citations – APA

Agu, W. N., Egiyi, M. A., & Ugwu, P. N. (2024). Enhancing Financial Performance in Consumer Goods Manufacturing Firms: A Comprehensive Analysis of Liquidity Management Strategies in Nigeria. Global Journal of Finance and Business Review, 7(1), 40-53. DOI: https://doi.org/10.5281/zenodo.10684738
This study delves into the research topic of “Enhancing Financial Performance in Consumer Goods Manufacturing Firms: A Comprehensive Analysis of Liquidity Management Strategies in Nigeria.” The primary objectives are to investigate the impact of liquidity management ratios on financial performance, specifically focusing on the current ratio, acid test ratio, and operating cash flow ratio in the context of consumer goods manufacturing firms. Employing a Two-Stage Least Squares (2SLS) regression approach, the research aims to assess how these liquidity metrics influence Return on Assets (ROA), considering their implications for strategic decision-making in a dynamic financial landscape. The study draws inspiration from the imperative for firms to strategically manage liquidity for improved overall financial performance. The empirical findings, based on a sample of five (5) consumer goods manufacturing firms, reveal nuanced outcomes. The 2SLS regression results indicate a statistically significant impact of the operating cash flow ratio on ROA, emphasizing the crucial role of cash flow management in influencing profitability. However, both the current ratio and acid test ratio do not exhibit significant effects on ROA. To contextualize these findings, the study aligns with existing research from various global settings, highlighting diverse outcomes in the relationship between liquidity management and profitability. The complexities unveiled underscore the necessity for industry-specific considerations in financial decision-making. In essence, this study contributes valuable insights to the ongoing discourse on liquidity management and financial performance in consumer goods manufacturing firms, offering a nuanced understanding of specific ratios that play a pivotal role in shaping financial outcomes. The adoption of the Two-Stage Least Squares methodology enhances the reliability of the empirical results, providing actionable implications for firms seeking to optimize their liquidity management strategies for enhanced profitability in the unique context of the Nigerian consumer goods manufacturing sector.ABSTRACT

Keywords: Consumer Goods Manufacturing Firms; Financial Performance; Liquidity Management Strategies; Liquidity Management Ratios

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