ABSTRACT

This study evaluates the relevance of cash flow activities to profitability of manufacturing firms in Nigeria. Whereas the specific objectives were to: Examine the relationship between net cash flow from operating activities and profit for the year of manufacturing firms in Nigeria and Ascertain the relationship between net cash flow from investing activities and profit for the year of manufacturing firms in Nigeria. An ex-post facto was adopted for the study. The adoption of the ex-post facto research design was informed by the fact that the work relied on historical data. The researcher made use of secondary data. The data is Panel data ranging from (2008 – 2017), there were extracted from the annual reports and accounts of the selected listed manufacturing firms on Nigeria Stock Exchange. E-views 9.0 Software was used to analyzed the data. The result revealed that, net cash flow from operating activities have positive and significant relationship with profit for the year of manufacturing firms in Nigeria between 2008 and 2017. The sign of the correlation coefficient of 0.784528 is positive, and the probability of 0.0000 < 0.05. we conclude that net cash flow from operating activities positively and significantly relate with profit for the year of manufacturing firms. While net cash flow from investing activities has a significant and negative correlation with profit for the year of firms in the manufacturing sector in Nigeria. This implies that increase in net cash flow from investing activities would influence a decrease in profit for the year. The sign of the correlation coefficient of -0.542910 is positive, and the probability of 0.0000 < 0.05. we conclude that net cash flow from investing activities negatively and significantly relate with profit for the year of manufacturing firms. we recommended that Managers of manufacturing firms in Nigeria should engage optimally, all activities that will generate more net cash inflow from operating activities and thoroughly evaluate investment activities to ensure optimal return so as to increase profit for the year of manufacturing firms in Nigeria.

Keywords: Profitability; Manufacturing Firms; Net Cash Flow; Operating Activities

Authorship
¹Ugwu, Timothy Chidubem, ²Prof. Oliver, I. Inyiama

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