Effect of Working Capital Ratio (Wcr) on Economic Value Added (Eva) at Each Stage of Business Life Cycle of Listed Manufacturing Firms in Nigeria

Despite myriads of studies on the effect of working capital management practices on manufacturing firm performance in different stages of business cycle, both in developing and emerging countries, and many others. Most of the studies evaluated the working capital management practices in isolation which can lead to poor decision making. Hence, the present study examined the effect of working capital ratio on economic value added at each stage of business life cycle of listed Manufacturing firms in Nigeria. Ex Post facto research design involving annual reports of sampled firms were used in the study. The population consists of 56 manufacturing firms from which 20 were purposively selected for the study. Descriptive statistics were used to describe the study variables at each stage of business life cycle, and inferential statistics in the form of composite scoring was performed to segregate the sample firms into various stages of life cycles. Panel data regression was employed to analyze the effect of working capital ratio on economic value added at each stage of business life cycle of sampled firms over twelve year’s period (2014–2025). All hypotheses were tested at 5% level of significance. The result of panel regression revealed that that WCR*MATS have positive and significant effect on EVA (β=.77.51743, t=2.06, p=0.039), and WCR*DECS have negative and significant effect on EVA (β=.5770516, t=-3.28, p=0.002). The study concluded that working capital ratio has significant effect on economic value added at each stage of business life cycle of listed Manufacturing firms in Nigeria. The study recommends that managers of manufacturing firms should adopt aggressive working capital strategies in both introduction and growth stage, conservative strategies in mature stages to balance liquidity and capital cost and implement highly conservative liquidity control in the decline stage.