This study examines the influence of inventory management practice as a critical governance tool on the financial performance of the Paint manufacturing companies in Nigeria. Inventory management practice as a vital tool for a manufacturing concern assist to remain competitive and effective, hence its efficient management cannot be underestimated. Relevant theories were reviewed by the study to provide good theoretical foundation for this research. The study population consists of Nine (9) listed manufacturing companies in Lagos state of Nigeria registered with LCCI and NSE as at 2019 for a period of 12 years (2008-2019). Both descriptive and inferential statistics were employed to analyze the pooled panel data through OLS regression method, having collected the panel data through cross sectional survey method. Both data from primary and secondary sources were subjected to diagnostic tests. The results revealed that there is a positive relationship between inventory management practice and financial performance but a negative relationship with return on sales of the sampled companies in Nigeria. The study recommends that the company managers should endeavor to design and monitor procedures for inventory control, improve communications across board, maintain good suppliers’ chain management of the inventory with adequate security. It is equally recommended that government needs to control the current spiral inflation and stabilize foreign exchange market as regards value of the Naira (Nigerian currency) to improve inventory management and enhance national economic development of Nigeria.