EFFECT OF CASH CONVERSION CYCLE ON FIRM PERFORMANCE OF QUOTED CONSUMER GOODS FIRMS IN NIGERIA

This study examines the effect of cash conversion cycle on firm performance of quoted consumer goods firms in Nigeria over a ten-year period from 2013 to 2022. It explores the relationship between inventory turnover period, average collection period, average payment period and return on assets (ROA) using secondary data from published audited financial statements. An ex-post facto research design was adopted for the purpose of the study. The population of the study is twenty-one (21) Consumer Goods firms listed on NGX website as at 31st December 2022. Twelve (12) firms were selected as the sample size using a filter method based on availability of financial data and sector classification. Secondary data from published audited financial statements were collected for the period of ten years from 2013 to 2022. Multiple regression analysis was used to examine the effect of the cash conversion cycle on financial performance with return on assets as the dependent variable and inventory turnover period, average collection period and average payment period as independent variables. The findings of the study reveal that while an increase in inventory turnover period and average collection period exhibits a positive effect on ROA, these relationships are statistically insignificant. However, a longer average payment period significantly enhances the return on assets of listed Consumer Goods firms in Nigeria. The study recommends that firms should focus on optimizing inventory management practices, streamline accounts receivable processes, and negotiate favourable payment terms with suppliers to improve cash flow, reduce financing costs, and enhance profitability in the Nigerian consumer goods industry.