Effect of Liquidity Management on Profitability of Listed Consumer Goods Firms in Nigeria

Purpose: This study examines the effect of liquidity management on the profitability of listed consumer goods firms in Nigeria over the period 2015–2024, with particular focus on how cash, quick and defensive interval positions translate into shareholder returns in a volatile emerging-market environment. Methodology: A quantitative correlational design was adopted using panel data from five listed consumer goods firms purposively selected for continuous listing and data availability, yielding 50 firm-year observations. Liquidity was measured using the Cash Ratio, Quick Ratio and Defensive Interval Ratio, while profitability was proxied primarily by Return on Equity, with Return on Assets and Return on Investment used for sensitivity analysis. Secondary data drawn from audited IFRS financial statements were analysed using descriptive statistics, Pearson correlation and multiple regression in SPSS. Results and Conclusion: The findings reveal a significant positive effect of the Cash Ratio on Return on Equity, while the Quick Ratio and Defensive Interval Ratio show weaker and largely insignificant direct effects on equity returns. The sensitivity analyses confirm that the Cash Ratio remains the dominant liquidity driver of profitability across alternative profitability measures. The study concludes that effective cash management is the strongest lever of shareholder returns among Nigerian consumer goods firms. Implication of findings: The findings suggest that managers of Nigerian consumer goods firms should prioritise robust cash management practices, integrate liquidity planning with strategic decision-making, and balance short-term solvency with the opportunity cost of holding idle cash in order to enhance shareholder returns under volatile macroeconomic conditions.