Working Capital Management and Profitability of Listed Manufacturing Companies in Nigeria

The main objective of this study was to examine the effect of working capital management on profitability of listed manufacturing companies in Nigeria. To achieve this objective, the study adopted an ex-post facto research design, extracting secondary data from the audited corporate reports of listed manufacturing companies covering a ten-year period from 2015 to 2025. The independent variable working capital management was measured using Days Inventory Outstanding (DIO), Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), and Cash Conversion Cycle (CCC). On the other hand, profitability was measured using return on assets (ROA) and return on equity (ROE). Econometric analysis was executed using a robust panel regression framework, utilizing pooled Ordinary Least Squares (OLS), fixed effects, and random effects models alongside the Hausman specification test to ensure statistical reliability. The empirical findings revealed a strong inverse relationship between corporate profitability and both the Days Inventory Outstanding (DIO) and Days Sales Outstanding (DSO); Days Payable Outstanding (DPO) yields flexible, interest-free short-term financing that supports operational fluidity without harming vendor relations. Based on these findings, it was concluded that proactive working capital management serves as a critical strategic anchor for sustaining corporate solvency and maximizing investor returns within the Nigerian industrial ecosystem. Consequently, the study recommended that financial managers of listed manufacturing concerns implement aggressive credit-control frameworks to accelerate trade collections, deploy automated inventory tracking mechanisms to eliminate stockholding redundancies, and strategically negotiate extended settlement windows with raw material vendors to maximize internal cash retention.