Effect of Inventory Management on Financial Performance: Evidence from Nigerian Conglomerate Companies
Inventory management is the determinant of effective and efficient work for any manager. This study looked at the relationship between inventory management and financial performance. The population of the study comprises all conglomerate quoted companies in the Nigerian Stock Exchange market as at 31st December 2010. The scope of the study covered the period from 2010 to 2014. Descriptive, Pearson correlation and multiple regressions are used to analyze the data. It was found that inventory management is significantly related to the profitability of the company. This entails that an efficient management of the inventory cycle will enhance the profitability of the company. Also, lack of proper management of it will hinder the financial performance of organizations. Based on the results, it was recommended that a conglomerate company should try to see that inventories are kept to a minimum, as well as make sure the proper checks are maintained to make sure only needed inventories are in the store. As well as to keep track of the movement of goods, in order to avoid unnecessary delay of finished and work in progress (WIP) goods in the store and warehouse.
[1] Salawati, S., Tiggi, M., Kadri, L. (2012). Inventory management of Malaysian constructing company: Impact on performance. SIU Journal management.
[2] Nyabwanga, R. N., Ojera, P. (2012). Inventory management practices and business performance for small scale enterprises in Kenya. Journal of Business management.
[3] Dimitrios, P. K. (2008). The effect of Inventory management on Firms performance. International journal of product and performance.
[4] Ogbadu, E. E. (2009). Profitability through effective management of materials. Mediterranean journal of social science.
[5] Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: 13th Edition Pearson Inc.
[6] Ogbo, A. I., Onekanma, I. V. (2014). Impact of effective inventory control management on organisational performance. Mediterranean journal of social science.
[7] Monday, j. U. (2008). Effect of efficient material management on Performance of firms in food and Beverage Manufacturing Industry in Nigeria. Obafemi Awolowo University, Nigeria: MBA Dissertation.
[8] Urendu, S. O., Egbide, B. C., & Enyi, P. E. (2012). Working capital management, liquidity and Corporate profitability among the quoted firms in Nigeria: Evidence from productive sector. International journal of Academic research in Accounting, Finance and management science.
[9] Samson, A. A., Josiah, M., Yemisi, B., & Erekpitan, I. O. (2012). The impact of working capital management on the profitability of small and medium scale enterprise in Nigeria. Research journal of business management.
[10] Mathias, M. J., Owuor, D. E. (2015). Effect of inventory management system on organisational performance. International journal of science and basic applied research.
[11] Owolabi, S. A., Alu, C. N. (2012). Effective working capital management and profitability: A study of selected Qouted manufacturing Companies in Nigeria. Economics and Finance review.
[12] Baveld, B. B. (2012). The Impact of working capital on the profitability of public listed firms in the Netherlands during financial crisis. Netherland: A master thesis in the department of Business Administration of Twente.
[13] Basin, W. M. (1990). A Tecnique of Appliny EOQ model to Retail Cycle Stock Inventories. Journal of Small Business Management.
[14] Miller. (2010). Inventory control: Theory and Practice. New Jersey.
[15] Benedict, C., Margeridis, H. (1999). Chain Reaction. Charter. Prentice Hall.
[16] Smaros, S. J., Lehtonen, J. M., Appelquist, P., & Holmstrol, J. (2003). The impact of increasing Demand visibility on production and inventory control efficient. International journal of physic distribution and logistic.
[17] Naliaka. V. W, Namusonge. G. S. (2015). Role of Inventory Management on Competitive Advantage among Manufacturing Firms in Kenya: A Case Study of Unga Group Limited: International Journal of Academic Research in Business and Social Sciences
[18] Perterson, R., Silver, E. (1998). Decision system for inventory management and production planning. New York: John Wiley and sons.
[19] Coyle, J. J., Bardi, E. J., & Langley, C. J. (2003). The Management of Business Logistics: A supply Chain perspective. Mason: South-East: Mason.
[20] Usama, M. (2012). Working capital management and Its Effect on firm profitability. Arabian journal of Business and Management.
[21] Edwin, S., Florence, M. (2016). The effect of Inventory management on profitability of Cement company in Kenya. International Journal of Management and Commerce Innovations, 111-119.
[22] William, M., Nyambura, M. T. (2015). The Role of Inventory Management on Performance of Food Processing Companies. European Journal of Business and Social Sciences, 64-78.
[23] Hamza, K., Murtala, Z., & Stephen, K. A. (2015). An assessment of the Inventory Management Practices of Small and Medium enterprise in Ghana. European Journal of Business and Management, 2222-2839.
[24] Soekhoe, S. G. (2010). Effect of working capital management on the profitability of Dutch listed firms. International research journal of finance and economics.
[25] Rimo, A., Panbunyuen, P. (2010). The effect of company characteristic on working capital management: A quantitative study of Swedish listed company. Swedish: UMEA school of business spring semester master thesis
[26] Warnes, S. (2013). The impact of working capital management on firms’ profitability: Empirical evidence from cement sector of Pakistan Stock Exchange. American journal of Governance and politics.
[27] Alipour, M. (2011). Working capital management and corporate Profitability. World applied science journal.
[28] Panigrahi, K. (2013). Cash conve of Indiarsion cycle and firms’ profitability: A study of cement manufacturing company. International journal of current research.
[29] Gill, A., Biger, N., & Mathur, N. (2010). The relationship between working capital management and profitability. United states: Evidence from United states.
[30] Padachi, K. (2006). Trends in working capital and it is impact on firms’ performance: An analysis of mauritanian small manufacturing firms. International review of business reseach papers.
[1] Salawati, S., Tiggi, M., Kadri, L. (2012). Inventory management of Malaysian constructing company: Impact on performance. SIU Journal management.
[2] Nyabwanga, R. N., Ojera, P. (2012). Inventory management practices and business performance for small scale enterprises in Kenya. Journal of Business management.
[3] Dimitrios, P. K. (2008). The effect of Inventory management on Firms performance. International journal of product and performance.
[4] Ogbadu, E. E. (2009). Profitability through effective management of materials. Mediterranean journal of social science.
[5] Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: 13th Edition Pearson Inc.
[6] Ogbo, A. I., Onekanma, I. V. (2014). Impact of effective inventory control management on organisational performance. Mediterranean journal of social science.
[7] Monday, j. U. (2008). Effect of efficient material management on Performance of firms in food and Beverage Manufacturing Industry in Nigeria. Obafemi Awolowo University, Nigeria: MBA Dissertation.
[8] Urendu, S. O., Egbide, B. C., & Enyi, P. E. (2012). Working capital management, liquidity and Corporate profitability among the quoted firms in Nigeria: Evidence from productive sector. International journal of Academic research in Accounting, Finance and management science.
[9] Samson, A. A., Josiah, M., Yemisi, B., & Erekpitan, I. O. (2012). The impact of working capital management on the profitability of small and medium scale enterprise in Nigeria. Research journal of business management.
[10] Mathias, M. J., Owuor, D. E. (2015). Effect of inventory management system on organisational performance. International journal of science and basic applied research.
[11] Owolabi, S. A., Alu, C. N. (2012). Effective working capital management and profitability: A study of selected Qouted manufacturing Companies in Nigeria. Economics and Finance review.
[12] Baveld, B. B. (2012). The Impact of working capital on the profitability of public listed firms in the Netherlands during financial crisis. Netherland: A master thesis in the department of Business Administration of Twente.
[13] Basin, W. M. (1990). A Tecnique of Appliny EOQ model to Retail Cycle Stock Inventories. Journal of Small Business Management.
[14] Miller. (2010). Inventory control: Theory and Practice. New Jersey.
[15] Benedict, C., Margeridis, H. (1999). Chain Reaction. Charter. Prentice Hall.
[16] Smaros, S. J., Lehtonen, J. M., Appelquist, P., & Holmstrol, J. (2003). The impact of increasing Demand visibility on production and inventory control efficient. International journal of physic distribution and logistic.
[17] Naliaka. V. W, Namusonge. G. S. (2015). Role of Inventory Management on Competitive Advantage among Manufacturing Firms in Kenya: A Case Study of Unga Group Limited: International Journal of Academic Research in Business and Social Sciences
[18] Perterson, R., Silver, E. (1998). Decision system for inventory management and production planning. New York: John Wiley and sons.
[19] Coyle, J. J., Bardi, E. J., & Langley, C. J. (2003). The Management of Business Logistics: A supply Chain perspective. Mason: South-East: Mason.
[20] Usama, M. (2012). Working capital management and Its Effect on firm profitability. Arabian journal of Business and Management.
[21] Edwin, S., Florence, M. (2016). The effect of Inventory management on profitability of Cement company in Kenya. International Journal of Management and Commerce Innovations, 111-119.
[22] William, M., Nyambura, M. T. (2015). The Role of Inventory Management on Performance of Food Processing Companies. European Journal of Business and Social Sciences, 64-78.
[23] Hamza, K., Murtala, Z., & Stephen, K. A. (2015). An assessment of the Inventory Management Practices of Small and Medium enterprise in Ghana. European Journal of Business and Management, 2222-2839.
[24] Soekhoe, S. G. (2010). Effect of working capital management on the profitability of Dutch listed firms. International research journal of finance and economics.
[25] Rimo, A., Panbunyuen, P. (2010). The effect of company characteristic on working capital management: A quantitative study of Swedish listed company. Swedish: UMEA school of business spring semester master thesis
[26] Warnes, S. (2013). The impact of working capital management on firms’ profitability: Empirical evidence from cement sector of Pakistan Stock Exchange. American journal of Governance and politics.
[27] Alipour, M. (2011). Working capital management and corporate Profitability. World applied science journal.
[28] Panigrahi, K. (2013). Cash conve of Indiarsion cycle and firms’ profitability: A study of cement manufacturing company. International journal of current research.
[29] Gill, A., Biger, N., & Mathur, N. (2010). The relationship between working capital management and profitability. United states: Evidence from United states.
[30] Padachi, K. (2006). Trends in working capital and it is impact on firms’ performance: An analysis of mauritanian small manufacturing firms. International review of business reseach papers.
@article{"International Journal of Business, Human and Social Sciences:74043", author = "Adamu Danlami Ahmed", title = "Effect of Inventory Management on Financial Performance: Evidence from Nigerian Conglomerate Companies", abstract = "Inventory management is the determinant of effective and efficient work for any manager. This study looked at the relationship between inventory management and financial performance. The population of the study comprises all conglomerate quoted companies in the Nigerian Stock Exchange market as at 31st December 2010. The scope of the study covered the period from 2010 to 2014. Descriptive, Pearson correlation and multiple regressions are used to analyze the data. It was found that inventory management is significantly related to the profitability of the company. This entails that an efficient management of the inventory cycle will enhance the profitability of the company. Also, lack of proper management of it will hinder the financial performance of organizations. Based on the results, it was recommended that a conglomerate company should try to see that inventories are kept to a minimum, as well as make sure the proper checks are maintained to make sure only needed inventories are in the store. As well as to keep track of the movement of goods, in order to avoid unnecessary delay of finished and work in progress (WIP) goods in the store and warehouse.
", keywords = "Finished goods, work in progress, financial performance, inventory.", volume = "10", number = "9", pages = "3192-5", }
