LIQUIDITY MANAGEMENT AND FIRM VALUE OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA
Abstract
This study examines the effect of liquidity on firm value specifically among
consumer goods firms in Nigeria. Secondary data were collected from listed
consumer goods firms in the Nigerian Exchange Group (NGX). The population of
the study comprises of the 21 listed Consumer Goods Firm as 2023. From the
population, a judgmental sampling technique was used to select a sample size
of 13 firms from where data were collected for the analysis covering a period of
8 years (2016-2023) using multiple regression model. The findings of the study
show that there is a negative but significant relationship between current ratio
and Tobin’s Q of listed consumer goods firms in Nigeria, a positive and
significant relationship between quick ratio and Tobin’s Q and a negative and
significant relationship between cash conversion cycle and Tobin’s Q. The study
therefore concludes that firms that are holding more cash and cash equivalents
specifically non-productive or low-yield current assets are bound to perform less
as compared to companies with more tangible assets than cash and cash
equivalents. Based on the conclusion, the study recommend that Listed
consumer goods firms in Nigeria must set a target current ratio that maintains
enough cash to handle short term obligations without overburdening it with idle
assets which tends to harm its market valuation.
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Published in JOURNAL OF BUSINESS & ECONOMY
ISSN: 2808-5428
This article appears in our peer-reviewed academic journal
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