Effect of Cash Conversion Cycle on Firm Performance of Quoted Manufacturing Firms in Nigeria
Chude, Nkiru Patricia *
Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, P.M.B 6059 Awka, Anambra State, Nigeria.
Chude, Daniel Izuchukwu
Department of Accountancy, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, P.M.B 6059 Awka, Anambra State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study examines the effect of the cash conversion cycle (CCC) on the firm performance of quoted manufacturing firms in Nigeria. The study adopted the ex-post facto research design. The sample comprised twenty-one quoted manufacturing companies on the Nigerian Stock Exchange selected using the purposive sampling technique. The study relied on secondary data which was analysed using multiple regression techniques. The results showed that CCC had a negative non-significant effect on return on assets (ROA) and return on equity (ROE). Additionally, Generalised Least Squares were used to test for individual components of the CCC effect on ROA and ROE. The study recommends that managers pay crucial attention to the working capital components and the utilisation of technological breakthroughs, such as the Advanced Manufacturing Techniques as it affects the value of the firm.
Keywords: Cash conversion cycle, manufacturing firms, Nigeria, technological breakthroughs