Accounts Receivable Management and Financial Performance of Selected Quoted Firms in Nigeria

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

Accounts Receivable Management and Financial Performance of Selected Quoted Firms in Nigeria

Yakubu Abubakar¹ and Gbenga Joseph Olowe²

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

Abstract: – This study examines the impact of Accounts Receivable Management onFinancial performance of selected quoted firms in Nigeria. The study have been conducted in different parts of the globe and in Nigeria with different findings which 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 proxy for accounts receivable management were accounts receivable ratio, debt ratio and Revenue growthwhile the proxy for financial performance was Return on Equity (ROE).The study reveals that accounts receivable ratio, debt ratio and Revenue growthshowed a positive significant impact on financial performance of selected quoted firms in Nigeria.

Keywords: Accounts Receivables Management, Financial performance, Debt, Revenue Growth and Firm Size.

I. INTRODUCTION

Accounts Receivable is the proceeds or payment which the company intends to receive from its customers who have purchased goods & services on credit. Usually the credit period is short ranging from few days to months or in some cases maybe a year. Accounts receivable management has to do with ensuring that customers invoices are settled on time based on the credit policy of the firm. Accounts receivable management helps prevent overdue payment or non-payment. It is therefore a quick and effective way to strengthen the company’s financial or liquidity position. Accounts receivables management helps management to determine the customer’s credit rating in advance, scanning and monitoring customers for credit risks, maintaining customer relations, detecting late payments in due time, detecting complaints in due time, reducing the total balance outstanding and preventing any bad debt in receivables outstanding.
The study of accounts receivable management on financial performance is important due to the fact that most firms have be liquidated as a result of poor management of accounts receivables. The accounts receivable forms part of the working capital used in running day to day activities of business and so if not managed properly can make a firm not meet its daily obligations. Accounts receivable management directly contributes to a company’s profit because it reduces bad debt. The company also has a better cash flow and higher available liquidity for use in investments or acquisitions.

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