European Journal of Accounting, Finance and Investment

Nexus Of Barriers Between Inventory Management Practice And Financial Performance: An Empirical Evaluation Of Paint Manufacturing Companies In Nigeria

Ajala, Olayimika A. PhD

Ladoke Akintola University of Technology, Faculty of Accounting & Management Sciences, Federal Polytechnic, School of Applied Sciences, Department of Statistics, Ede-Nigeria.

Tajudeen T. Lawal, PhD

Ladoke Akintola University of Technology, Faculty of Accounting & Management Sciences, Federal Polytechnic, School of Applied Sciences, Department of Statistics, Ede-Nigeria.

Benjamin A. Amola

Ladoke Akintola University of Technology, Faculty of Accounting & Management Sciences, Federal Polytechnic, School of Applied Sciences, Department of Statistics, Ede-Nigeria.

Keywords: Inventory management, financial performance, Simulation, Unified forex

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Abstract

Aims: This study evaluates the nexus of barriers between inventory management practice and financial performance in Paint manufacturing companies in Nigeria. Relevant theories on inventory management and financial performance were reviewed so as to guide and provide sound theoretical foundation for the research.

Sample: The study population consists of 09 listed Paint Manufacturing Companies in Nigeria registered with LCCI and NSE as at 2021.

Study design: Both descriptive and inferential statistics were used to analyze the panel data through OLS regression method. A descriptive survey was employed to explore inventory management practices for the Panel data collected for the study.

Methodology: Both descriptive and inferential statistical analysis using data collected through cross sectional survey method from both primary and secondary sources were employed. 160 out of the 200 questionnaires constructed on Likert scale points were returned and analyzed.

Location/Study Area & Duration: Lagos state which remain the hub and industrial nerve center for Nigeria was selected for a period of 14 years (2008-2021). Nine were purposively selected out of the Fourteen Listed Paint manufacturing companies, based on geographical spread across Lagos state metropolis as such that one out of paint company in a particular area was selected for the purpose of the study.

Results: The results indicated that there is a positive relationship between inventory management practice and financial performance (ROCE & ROE) but a negative relationship with (ROS) of the listed Paint companies in Nigeria.

Conclusion & Policy Recommendations: It is recommended that management should endeavor to design and monitor procedures for inventory control and budgeting, maintain good suppliers’ chain management of the inventory with adequate security. Government needs to stabilize and improve on the present Unified foreign exchange market (forex) for adequate supply of raw materials and enhance sustainable economic growth for the manufacturing companies and Nigeria.