RECEIVABLES AND PAYABLES MANAGEMENT: IMPLICATION FOR COMPANIES’ PROFITABILITY AND SURVIVAL IN NIGERIA

Ibrahim, Abdul-Lateef Ayomide (2022) RECEIVABLES AND PAYABLES MANAGEMENT: IMPLICATION FOR COMPANIES’ PROFITABILITY AND SURVIVAL IN NIGERIA. Masters thesis, Landmark University, Omu Aran, Kwara State.

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Abstract

The importance of receivables and payables management on profitability and survivability of companies cannot be overemphasized This is in view of the tradeoff that exists between Liquidity and Profitability. Receivables Management Proxy was the debtors' collection period while payables management was measured using the creditor's payment Period. The proxy for profitability was return on equity while the survival proxy is the age of the firm. The study addressed the following research questions; What is the effect of the Debtors Collection Period on Companies’ Return on Equity? What is the influence of the Creditors Payment Period on Companies’ ROE? How does the Debtors Collection Period affect Companies’ Age of the Firm in Nigeria? What is the functional association of the Creditors Payment Period on Age of Quoted Firms in Nigeria? Data were gathered using the financial statements of 70 publicly traded companies across three sectors (Financial, Manufacturing, and Oil and Gas). Descriptive statistics and Ordinary Least Square were the analytical techniques used in the study with the aid of the Statistical Package for Social Sciences (SPSS). The results show that creditors' payment period has a positive effect on profitability with a coefficient value of 0.000 and a t statistic of 6.920. With a coefficient value of 0.010 and 0.028, the findings conclude that CCP has a beneficial impact on the companies’ returns in Nigeria. Results showed that DCP has a beneficial impact on listed companies' existence in Nigeria. By adopting a stringent credit policy, hence the number of collection days will reduce thus increasing profitability in the short-run and long run. Key Words: Receivables Management, Payables Management, Profitability, Survival

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