Conference Paper

WORKING CAPITAL MANAGEMENT AND ECONOMIC PERFORMANCE: EVIDENCE FROM PROFITABILITY OF LISTED AGRICULTURAL COMPANIES IN NIGERIA

Working capital management WCM is an important strategic element of financial management. The optimal balance between current assets and current liabilities becomes inevitable in order to promote financial robustness and long-term profitability. This study therefore examined the effect of WCM (proxied by net working capital (NWC), change in working capital (CWC), net operating working capital (NOWC) and working capital to sales ratio (WCSR)) on economic performance, proxied by Return on Asset (ROA), of listed agricultural companies in Nigeria. This study adopted an ex-post facto research design where panel data for a period of 10 years (2015-2024) were extracted from agricultural companies listed on the Nigerian Exchange Group (NGX). As of December 2024, there were 5 agricultural companies listed on the NGX. Due to the population size, the 5 listed agricultural companies were all used as sample size. The extracted data were analyzed using both the descriptive and inferential analytical tools. Correlation analysis revealed weak negative relationships between ROA and NWC, CWC, NOWC, and WCSR. The results also show that the p-values for NWC, CWC, NOWC, and WCSR are 0.6518, 0.4196, 0.4463, and 0.5462 respectively which are all greater than 0.05. This indicates that NWC, CWC, NOWC, and WCSR do not significantly affect the ROA of listed Agricultural Companies in Nigeria. Since working capital management did not show strong effect on profitability in this study, managers should also focus on other areas that can improve profit. These include reducing production cost, using better technology, and finding new markets for their products. Keywords: Working Capital Management, Profitability, Return on Asset, Net Working Capital