EFFECTS OF INFLATION ON CORPORATE PERFORMANCE IN NIGERIA

ABSTRACT This study examines the effect of inflation on corporate performance in Nigeria, focusing on publicly listed companies from 2019 to 2023, with Dangote Cement Plc as the case study. The research explores how inflation, a persistent economic issue in Nigeria, impacts financial indicators such as Return on Equity (ROE), Return on Assets (ROA), and sales growth. Inflation can significantly affect businesses by increasing production costs and eroding consumer purchasing power, thus influencing overall corporate performance. The objectives of the study are to assess the relationship between inflation and key corporate performance metrics, including ROE, ROA, and sales growth. The research adopts a quantitative approach using data from annual reports and the National Bureau of Statistics. The Ordinary Least Squares (OLS) regression model is employed to analyze the data and determine the impact of inflation on these metrics. The findings reveal a significant positive relationship between inflation and ROE as well as sales growth, indicating that firms can maintain or enhance profitability by passing costs onto consumers. However, the relationship between inflation and ROA is found to be statistically insignificant, suggesting that inflation alone may not be a major determinant of asset profitability. The study recommends that policymakers focus on stabilizing inflation through effective monetary and fiscal policies to create a more favorable business environment. Firms should adopt strategic measures to mitigate the effects of inflation, such as adjusting pricing strategies and improving operational efficiency. Investors are also advised to consider inflation when making investment decisions to ensure sustainable returns.