Caleb Y. Yashim1, Simon E. Senzak2, D. O. Gbegi3 and Danazumi E. Bako4 1Department of Accounting, Bingham University, Karu, Nasarawa State, Nigeria 2
Department of Accounting, University of Jos, Nigeria 3Department of Accounting & Business Administration, Federal University of Kashere, Gombe State, Nigeria 4Department of Accounting, Plateau State University, Bokkos, Nigeria E-mails/Phone Number: meetemsimon@gmail.com, gbegidan@gmail.com, karlfancy@gmail.com; +234 7035303440.
ABSTRACT
Working capital management is very crucial in this period of global financial turmoil.
Working capital is regarded as the lifeblood and nerve of a business concern, it is therefore
essential to accommodate the smooth operations of any organization, but Studies in working
capital management have provided inconclusive results. The objective of this study is to
examine the effect 0f Working Capital Management on Financial Performance of Selected
Deposit Money Banks in Nigeria.The study covers the period of thirteen years (2007 to 2019).
Data for the study were extracted from the Deposit Money Banks’ Annual Reports and
Accounts. After running the Ordinary Least Square (OLS) regression, a robustness test was
conducted for validity of statistical inferences; the data was empirically tested between the
regressors and the regressed.The results from the analysis revealed that Working Capital
Management has no significant effect on Earnings per Share (EPS) of selected Deposit Money
Banks in Nigeria, but Working Capital Management has significant effect on Return on Asset
(ROA) and Return of Equity (ROE) of selected Deposit Money Banks in Nigeria. In line with
the above findings, the study recommended that the management should put more attention
on their liquidity in order to maintain an adequate liquidity as the study has empirically
proved that higher liquidity signifies more profitability; the listed Deposit Money Banks in
Nigeria should try and maintain a higher quick ratio as it will have a positive effect on their
profitability.Finally, the management should reduce holding too much amount of cash in
current asset as it constitutes idle cash, instead the firm should invest the cash so that it could
yield higher returns
Key words: W o r k i n g c a p i t a l ma n a g e m e n t , fi n a n c i a l p e r f o r m a n c e ,
current ratio, profitability ratio