Abstract

THE MANAGEMENT OF SHORT-TERM ASSETS AND THE PROFITABILITY OF FIRMS (A STUDY OF SELECTED FIRMS LISTED ON THE NIGERIAN STOCK EXCHANGE)

DR . AMINU YUSUF

Volume: 6 Issue: 3 2016

Abstract:

Current assets of any business are the short-term assets and they comprise of items such as stocks and inventories, receivables, cash in hand and at bank, debtors and prepayment. The current assets composition of any firm is vital in determining its profitability, hence the need for this study. Panel data methodology was therefore employed to test this relationship with both fixed and random effects estimation techniques in running the panel regressions. Eighteen number (18) firms listed on the Nigerian Stock Exchange were studied for five (5) periods (2011-2015). Results from the panel regressions revealed a strong negative relationship between CATAR and profitability depicting that the greater the concentration of current assets in the total assets, the lower the gross operating profit, which translates to mean that higher investment in current assets results to lower gross operating profit of the firms listed on the Nigerian Stock Exchange. Therefore, effective management of the short-term assets is the only panacea in ensuring the survival of firms. Finally managerial implications and suggestions were provided.

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