IMPACT OF WORKING CAPITAL ON FIRMS’ PERFORMANCE IN NIGERIA

Sadiq RAJI, Ibrahim ADEBAYO, Oyindamola FOLARIN

Abstract

The ability of management to focus mainly on profit making and neglecting the working capital leads to firms’ failure. The objective of this study is to examines the impact of working capital on firms’ performance in Nigeria. The data were extracted from audited financial statements of agricultural firms and banks respectively for the period of thirteen (13) years (2002-2014). Data were analyses with the use panel method. The findings indicate that there is no significant relationship between working capital and firms’ performance in Nigeria. There is a significant relationship between working capital and firms’ performance measured by current ratio. The study recommends that firms should focus on ability to meet is short term obligation in order to ensure the survival of the business in the long run.

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