Title: IMPACTS OF WORKING CAPITAL MANAGEMENT ON ORGANIZATIONAL PERFORMANCE: MARKET COMMONALITY AND RESOURCE SIMILARITY APPROACH

Author: Onwumelu Odinakachi Philip

Abstract: Drawing from the market commonality and resource similarity of UNILEVER and PZ, the objective of this study is to investigate the working capital management variables on the profitability of UNILEVER and PZ industries from 2007 – 2016. Secondary data were collected from the published annual reports and audited financial statements of the two companies and analyzed using SPSS Version 24. The selected (explanatory) variables referred to as independent variables are inventory period , receivables period, payables period, liquidity(current ratio) and leverage while return on assets (ROA) was used as a proxy for profitability and as such referred to as dependent variable. The result of the descriptive statistics shows that payables has the highest mean value of 116.37 and standard deviation value of 66.26,an indication that the payables has more impacts on the overall model; and represents the center of distribution of the data. While the standard deviation value shows how spread out the data were from the mean. The Pearson 2-tailed correlation carried out at 5% (0.05) and 1% (0.01) were positively and statistically significance, an indication that a strong positive relationship exist among the variables in the model. This was further confirmed by the R2value of 0.848(84.8%) and adjusted R2value of 0.794(79.4%) which means that 84.8% of the variations in the profitability of UNILEVER and PZ industries can be predicted from the relationship between the variables used in the model .While the remaining 15.2% of the variations could be explained by other variables not included in the model. Finally, Anova with df (4,15) and F-test value of 15.7 shows that the model fits the data and structurally stable because the significant value(0.000) is less than 0.05. The study recommends that the companies should concentrate on the management of leverage among others because any change on it brings about a change in their return on assets.

Keywords: impacts, working capital management variables (inventory, payables , receivables, leverage, liquidity) , return on assets.

PDF Download