Cash Conversion Cycle and Corporate Profitability: Evidence from Quoted Non- Financial Firms in Nigeria

Chinedu Francis Egbunike(1), Nwaolisa Felix Echekoba(2),

(1) Department of Accountancy; Nnamdi Azikiwe University; Awka; Anambra State; Nigeria
(2) Department of Banking & Finance; Nnamdi Azikiwe University; Awka; Anambra State; Nigeria


The purpose of this paper is to determine the direct relationship between cash conversion cycle (CCC) and corporate profitability of quoted non-financial firms in Nigeria. The study adopted the ex-post facto research design. The population comprised all quoted manufacturing companies on the Nigerian Stock Exchange as at 31 st December 2017. Purposive sampling was used to select twenty-one firms all in the consumer goods sector. The study employed the Generalised Least Squares (cross- section weights). The empirical results showed that CCC had a positive but non- significant effect on gross profit margin (GPM) and net profit margin (NPM). However, CCC had a negative non-significant effect on return on assets (ROA) and return on equity (ROE). The study demonstrates the ability of managers to create a positive value for shareholders by reducing the days customers settle their accounts, ensuring that they sell off their inventories as quickly as possible and delaying the payments to their suppliers, as long as this does not affect their credit rating.


cash conversion cycle, corporate profitability, working capital management






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