WORKING CAPITAL MANAGEMENT AND VALUE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

This study investigated the impact of working capital management on value of listed oil and gas companies in Nigeria, with the specific objectives to determine the impact of account receivables collection period, account payables payment periods and inventory conversion period on Tobin’s Q as well as share price. The study’s aims were achieved using panel data. The study employed an explanatory, descriptive and correlational research design. Six research hypotheses were put out for the study and generalized least squares regression was utilized to analyze the data taken from the annual reports and financial statements of the sampled companies from 2006 to 2019. The proxies for firm value used for this study were Tobin’s Q and share price. The study result showed that inventory conversion period significantly and negatively affects value of Nigerian listed oil and gas firms while account receivables collection period has negative but insignificant impact on value. Furthermore, account payables payment period has a significant positive effect on firm value.  In light of these findings, the study recommends among other things, that the receivables collection period be decreased as far as is practicably possible below 365 days during favorable economic conditions, and vice versa, as this will positively boost value. It is further recommended that inventory conversion period be reduced as reasonably minimum while extending account payables payment period as reasonably possible so as to impact positively on value.