Working Capital Management and Profitability of Quoted Consumer Goods Companies in Nigeria

Efficient management of working capital is a determinant of corporate liquidity, operational continuity, and short-term profitability, making it particularly critical for consumer goods companies operating in volatile supply and demand environments. This study examines the effect of working capital management on the profitability of quoted consumer goods firms on the Nigerian Exchange Group, using secondary data from audited financial statements for the period 2019 to 2023. Key working capital variables, including the cash conversion cycle, accounts receivable days, accounts payable days, and inventory holding period, are analysed as independent variables, while return on assets and gross profit margin serve as dependent measures of profitability. The study applies panel regression analysis using both fixed and random effects estimators to accommodate firm-level heterogeneity. The research is situated within the cash conversion efficiency framework and draws on the trade-off theory of liquidity to interpret the balance between profitability and solvency. The geographic dimension of the study acknowledges the different distribution and logistics challenges faced by firms operating in northern versus southern markets. The consumer goods sector provides a rich testing ground due to its high inventory turnover, competitive retail pricing pressures, and dependence on imported inputs. Findings are expected to yield practical guidance for treasurers and financial controllers in the sector, as well as evidence for academic discourse on working capital in frontier markets. Keywords: working capital, cash conversion cycle, profitability, consumer goods, Nigerian Exchange Group