Accounts Receivable Management and Financial Performance of Listed Manufacturing Firms in Nigeria
Keywords:
Accounts Receivable Management, Financial Performance, Manufacturing Firms, Profitability, Liquidity, Liquidity; Profitability; Cash flow; Ex-post facto research design; Nigerian Exchange GroupAbstract
Objectives: This study investigates the effect of accounts receivable management on the financial performance of listed manufacturing firms in Nigeria, using net profit margin and current ratio as performance measures. Prior Work: Extant literature highlights the critical role of accounts receivable management in ensuring optimal cash flow and liquidity. Previous empirical studies in Nigeria have shown mixed results, primarily focusing on profitability. This study addresses the gap by simultaneously examining profitability and liquidity. Approach: An ex-post facto research design was employed using panel data from 19 manufacturing companies listed on the Nigerian Exchange Group (2011–2022), analyzed via Random and Fixed Effects regression models. Results: The cash conversion cycle shows a significant negative effect, while the accounts receivable period shows a significant positive effect on the current ratio. Effects on net profit margin were insignificant, with only the debt-to-assets ratio showing a significant negative effect on both measures. Implications: Managers should adopt robust credit policies and prompt collections to enhance liquidity. Academically, the study confirms a stronger link between receivable management and liquidity than profitability in the Nigerian manufacturing context. Value: This study uniquely incorporates liquidity alongside profitability as performance measures, providing recent empirical evidence capturing post-trade policy reform effects in Nigeria.
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