ISSN : 2047-2528

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The Study of Working Capital Management as a Financial Strategy (A Case Study of Nestle Nigeria PLC)
 
OWOLABI, Sunday Ajao and ALAYEMI, Sunday Adebayo
 
 
Working capital management as a financial strategy has its effects on liquidity as well as profitability of the firm. In this study Nestle Nigeria Plc. was selected for a period of five years from 2004-2009.The effect of different variables of working capital management including current ratio and collection days on Gross profit movement co-efficient was used for analysis. The results showed that there is a negative correlation (-0.67) between current ratio and profitability. This means that as current ratio reduces, profitability of the firm will increase. On the other hand the collection days was regressed against ROCE, this showed that there is negative correlation between (0.43) collection days and ROCE. This indicates that as collection days are reduced there will be increase in profitability. The firm should be aggressive in the management of its working capital to improve profitability.

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