EFFECT OF INVENTORY MANAGEMENT ON PROFITABILITY OF MANUFACTURING COMPANIES IN NIGERIA: A STUDY OF DANGOTE CEMENT PLC

This study examined the Effect of inventory management on profitability of manufacturing companies in Nigeria. Specifically, the study determined the effect of Inventory turnover ratio, Inventory Conversion Period, Sales growth rate on Net Profit Margin of manufacturing companies in Nigeria. An ex –post facto research design approach was adopted for the study. The population of this study comprise of five (5) listed building material firms . Using time series data for the period of five (5) years from 2019-2023) and a purposive sampling method, Dangote Cement plc was chosen as the sample size. Secondary data were carefully obtained which includes the annual report of the companies from 2019 to 2023 financial year obtained from Nigerian Exchange Group and the company’s website. The data collected were presented and analyzed using tables, descriptive and inferential statistics. Three hypotheses were formulated and tested in the course of this study. Regression analysis was used to test for statistical significance of the effects of inventory management on profitability of building material firms in Nigeria. The results showed that There is positive but insignificant effect of Inventory turnover ratio on the Net Profit Margin of building material firms in Nigeria. The findings further revealed that there is negative but significant effect of Inventory Conversion Period on the Net Profit Margin of building material firms in Nigeria. Finally, the result established also that there is negative but significant effect of Sales growth rate on the Net Profit Margin of building material firms in Nigeria. Consequent upon the findings, this study recommends among others; that Management should closely monitor and manipulate their inventory system to maintain production consistency to sustain sale growth rate.