International Journal of Research and Scientific Innovation (IJRSI) | Volume VI, Issue IV, April 2019 | ISSN 2321–2705

Inventory Management and Financial Performance of Selected Quoted Firms in Nigeria

Yakubu Abubakar¹, Ese Theresa Esenohor² and Gbenga Joseph Olowe³

¹Department of Accounting, Ahmadu Bello University, Zaria, Nigeria.
²College of Education, Warri, Nigeria.
³Gbenga Olowe & Co Chartered Accountants Firm

Abstract: – This study examines the impact of Inventory Management and Financial performance of selected quoted firms in Nigeria. The study have been conducted in different parts of the globe and in Nigeria with different findings that are mixed and inconclusive. The population of the study consists of ten (10) firms quoted on the Nigerian stock exchange as at 31st December 2018 out of which ten (10) firms were selected as samples for a period of seven (7) years from 2012 to 2018 based on purposeful sampling technique. The study uses multiple regressions as a tool for analysis. The study reveals that Inventory turnover ratio showed a positive significant impact on financial performance of selected quoted firms in Nigeria.

Keywords: Inventory management, financial performance, Revenue.

I. INTRODUCTION

Inventory management is the supervision of non-capitalized assets and stock items. Inventory Management as a component of supply chain management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale. A key function of inventory management is to keep a detailed record of each new or returned product as it enters or leaves a warehouse or point of sale.A good inventory management strategy improves the accuracy of inventory orders, lead to a more organized warehouse, Saves Time and money, increases efficiency and productivity and Keeps existing and new customers. One of the variables that measures Inventory management is Inventory Turnover.
The inventory turnover ratio shows how quickly a company sells its Products. It is computed by dividing the Revenue generated by average inventory. Inventory turnover ratio is one of the financial ratios that provide information about the liquidity of a company. Liquidity ratios identify whether a company can meet its short-term financial obligations. Moreover, financial managers may use liquidity ratios to manage companies’ assets more efficiently. Managing inventory for companies that sell goods can play an imperative role in their success or failure. Having a large quantity of unsold inventory may mean interest expense and additional cost for storage.