This study examined the impact of working capital management on the financial performance of listed oil and gas firms in Nigeria. It aimed to determine the impact of cash conversion cycle (CCC), net liquidity balance (NLB), and working capital requirement (WCR) on financial performance. The study used secondary data covering a period of 13 years (2012–2024), and a longitudinal panel research design on a sample of six oil and gas companies. It also employed descriptive statistics (mean, median, minimum, and maximum values) and panel data analytical techniques, including Pooled Ordinary Least Squares (OLS), fixed effects (FE), and random effects (RE) models for data analysis. The findings showed that CCC has a positive and highly significant impact on financial performance, NLB (liquidity holdings) does not strongly drive performance, and WCR has a negative and significant impact on financial performance. This implies that the cash conversion cycle plays a critical role in shaping the financial performance of listed oil and gas firms in Nigeria. The positive and highly significant result for CCC indicates that extending the cycle, allowing more time for inventory turnover and the collection of receivables, can support operational stability and improve profitability in this sector, likely due to the capital-intensive and contract-driven nature of oil and gas operations. At the same time, excessive delays could strain liquidity, so CCC should be managed carefully to balance operational flexibility with cash flow efficiency. Meanwhile, the insignificant impact of net liquidity balances suggests that simply holding cash does not drive performance, and the negative effect of working capital requirement highlights that over-investment in current assets can constrain profitability.
Akhuamheokhun et al. (Thu,) studied this question.