Liquidity Management and Financial Performance of Listed Consumer Goods Firms in Nigeria

Abstract

This study examined the effect of liquidity management on the financial performance of listed consumer goods firms on the Nigerian Exchange Group. Anchored on the Working Capital Management Theory, the study adopted an ex-post facto research design. The population comprised all consumer goods firms listed on the NGX. Panel data covering the period 2016 to 2025 was extracted from the audited annual reports of the sampled firms. Financial performance was proxied by Return on Assets and Return on Equity, while liquidity management was measured using Current Ratio, Quick Ratio, and Cash Conversion Cycle. Firm size was included as a control variable. The results revealed that Current Ratio and Quick Ratio have a positive and significant effect on both ROA and ROE, while Cash Conversion Cycle has a negative and significant effect on financial performance, suggesting that a shorter cash conversion cycle leads to improved financial performance. Firm size was found to have a positive and significant influence. The study concludes that efficient liquidity management is a critical determinant of profitability of consumer goods firms in Nigeria. It is recommended that firms maintain optimal liquidity levels, shorten their cash conversion cycle through efficient inventory and receivables management, and leverage their size to enhance financial performance.

Keywords: Working capital management, Financial performance, Current ratio, Quick ratio, Cash conversion cycle, Consumer goods firms, NGX

DOI: 10.7176/EJBM/18-10-04

Publication date: October 30^th 2026