Conference Paper

COST STRUCTURE AND FINANCIAL PERFORMANCE OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

This study investigated the effect of cost structure on the financial performance of listed consumer goods companies in Nigeria. The study specifically examined the effect of operating cost, cost of goods sold, and finance cost on return on equity. The study adopted an ex post facto research design and utilized secondary data sourced from the audited annual financial reports of ten purposively selected consumer goods companies listed on the Nigerian Exchange Group for a ten-year period spanning 2015 to 2024. Data were analyzed using descriptive statistics, correlation analysis, unit root tests, and panel regression estimation. The Hausman specification test confirmed the random effect model as the appropriate estimator. The findings revealed that operating cost had a positive but statistically insignificant effect on return on equity (β = 1.35E-09, p = 0.4567). Similarly, cost of goods sold exhibited a positive but insignificant relationship with return on equity (β = 1.25E-11, p = 0.9801). However, finance cost had a negative and statistically significant effect on return on equity (β = -1.45E-08, p = 0.0022). The model was jointly significant (F = 3.3763, p = 0.0215) with an R-squared of 0.0954. The study concluded that finance cost is the most critical cost component influencing the profitability of consumer goods firms in Nigeria. The study recommended that firms minimize excessive reliance on debt financing, explore cost-effective financing alternatives, and strengthen equity financing and retained earnings utilization to reduce the adverse effect of finance costs on profitability. Keywords: Cost Structure, Operating Cost, Cost of Goods Sold, Finance Cost, Return on Equity, Consumer Goods, Nigeria