SOLVENCY CONTROLLING AND RETURN ON ASSET OF INDUSTRIAL ORGANIZATIONS IN NIGERIA
Abstract
The study focused on solvency controlling and return on asset of industrial organizations in Nigeria. The purpose was to assess how credit management influence return on asset of the organizations that were considered. Data were collected from published financial reports of these organizations. Data collected were analyzed using multiple regression model. Results of the analysis revealed that solvency controlling did not affect return on asset significantly; and insolvents’ turnover has insignificant though positive effect on return on asset of the studied organizations. Based on the findings, the major recommendation was that of industrial organizations in Nigeria should institute active and proficient credit policy that can take into consideration credit worthiness of clienteles which would in turn influence their return on asset.
JEL: L10; L16; G10
Article visualizations:
Keywords
Full Text:
PDFReferences
Akabom Ita Asuquo, Ejabu Fidelis Enya, Bogbo Regina Jaka, Atu Otuba Akung, Adejonpe Anthony Olayinka (2018). Accounting Behaviour of Small-Scale Enterprises in Nigeria: Focus on Business Sustainability and Growth, Journal of Business and Economic Development. Vol. 3, No. 2, 2018, pp. 43-50. doi: 10.11648/j.jbed.20180302.12
Akoto, R. K., Awunyo-Vitor, D. & Angmar, P. L. (2013). Working capital management and profitability: Evidence from Ghanaian listed manufacturing firms. Journals of Economics and International finance 5(9), 373-379.
Asuquo, A. I. & Arzizeh, T. T. (2012). An empirical analysis of foreign exchange rate risk exposure and the performance of Nigerian companies: 2002-2011. International Journal of Current Research and Review 4(23) 1-8,
Asuquo, A. I. & Ejabu, F. E. (2018). Effects of Thin Capitalization and International Law on Performance of Multinational Companies in Nigeria. Journal of Accounting and Financial Management, 4(2). Retrieved from https://iiardpub.org/get/JAFM/VOL.%204%20NO.%202%202018/EFFECTS%20OF%20THIN.pdf
Asuquo, A. I. (2011). The application of standard magnitude variance in optimal capital structuring/working capital management in business organizations. Multi-Disciplinary Journal of Academic Excellence. 5(1), 109-120.
Asuquo, A. I. (2012). Empirical analysis of the impact of information technology on forensic accounting practice in Cross River State-Nigeria. International Journal of Scientific and Technology Research 1 (7) 25-33. IJSTR Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=072FE6A32B14F334CC271A8122F12880?doi=10.1.1.638.9817&rep=rep1&type=pdf
Asuquo, A. I. (2012). Impact analysis of interest rate on net assets of multinational business in Nigeria. Research Journal of Finance and Accounting, 3(7), 64-70,
Asuquo, A. I. (2013). Analysis of financial accounting standards and their effects on financial reporting and practices of modern business organizations in Nigeria. European Journal of Business and Management. 5(4), 60-68, Retrieved https://www.iiste.org/Journals/index.php/EJBM/article/view/4468/4536
Asuquo, A. I., Effiong, S. & Tiesieh, A. (2012). The effect of financial management practice on profitability of small and medium enterprises in Nigeria. International Journal of Research in IT, Management and Engineering, 2(3)
Asuquo, A. I., Fadenipo, A. A., Ogbeche, L. O. & Ahonkhai, O. E. (2017). Effect of inflation accounting on business income measurement of quoted manufacturing companies in Nigeria. Imperial Journal of Interdisciplinary Research. 3(1). Retrieved from http://www.onlinejournal.in/IJIRV3I1/337.pdf
Bastos, R. & Pindado, J. (2012). Trade credit during a financial crisis: A panel data analysis. Retrieved from http://www.sciencedirect.com/science/article/pii/S0148296312000999.
Beckan, T. N. & Richard, E. B. (1984). Credit and collection management and theory. New York: McGraw Hill Book Company.
Berry, F. & Jarvis, M. (2006). Profit contribution accounting and marketing interface. Industrial Marketing Management, 6, (2), 125-128.
Bhunia, A. (2010). A trend analysis of liquidity management efficiency in selected private sector Indian steel industry, International Journal of Research in Commerce and Management, 1(5), 213- 219.
Bridge, B. M. (1998). Financial distress in local banks in Kenya, Uganda and Zambia: Causes and implications for regulatory policy. Development Policy Review Journal, 16(2), 173~189.
Demirgus-Kunt, A. & Maksimovic, V. (2011). Law finance and firm growth. The Journal of Finance, 53, 2107-2137.
Derban, W. K., Banner, J. M. & Mullineaux, A. (2000). Loan repayment performance in community development finance institution in the UK. Small Business Economics 23, 319-332.
Dunn, M. (2009). Why you need credit policy. Retrieved on December 13 from www.whyyouneedcreditpolicy.com.
Eljelly, A. (2004). Liquidity-profitability trade off: An empirical Investigation in an emerging market. International Journal of Commerce & Management, 14(2). 48–61
Enarke, D. (1989). Credit management practices in developed countries and Nigeria experience: Lagos: Eldota Ventures limited.
Eugene, F. B. (1992). Fundamentals of financial management (6th ed.), Illinois: Dryden Press.
Garkure, R. Cheluget, K. J., Onyango, J. A. & Keravo, V. (2014). Working capital management and profitability of manufacturing firm listed at the Nairobi stock exchange. Prime Journal of Business Administration and Management, 12(3),13-24.
Ibid (2005). Management Accounting (4th Ed). Lagos: Wyse Association Limited.
Ifurueze, M. S. K. (2013). The impact of effective management on credit sales on profitability and liquidity of food and beverage industry in Nigeria. Global Journal of Management and Business Research, 13(2), 12-32.
Investopedia (2013). Retrieved from http://www/investopedia.com
James, C. (2012). Financial management and policy. New Delhi: Prentice Hall of India Private Limited.
Kairu, P. K. (2009). Credit management (2nded.). Nairobi: Focus Publishers Ltd.
Khatab, Q., Masood, M., Zamman, D., Saleem, D. & Saheed, T. (2011), Corporate governance and firm profitability. A study of Karachi stock exchange. International Journal of Trade Economics and Finance, 12(1)39-43.
Maddison, W. I., Wollk Toolkit Series No. 4. 230.
Margrabe K. (2007). The incidence of secured debt: evidence from the small business community. Journal of Financial and Quantitative Analysis, 24, 379-394.
Markowitz, H. (1959). Portfolio selection. New Haven: Connecticut: Yale University Press.
Mason, G. & Roger, B. (1998). A capital adequacy framework for Islamic banks: the need to reconcile depositors' risk aversion with managers' risk taking. Applied Financial Economics, 14(4), 429-441.
Ogula, P. (2005). Research methods. Nairobi: CUEA Publications.
Pass, R. & Pike, C. (1984) Management of working capital and corporate financing Management, International Journal of Trade Economics and Finance,3(3), 1-10.
Peterson, M. & Rajan, S. (2007) Trade-credit theories and evidence. Retrieved from http://nberorg/paper/w5602.pdf.
Richardson, D. C. (2002). PEARLS monitoring system world council information centre.
Romanvorthy, V. E (2014). Working capital management. Institute for Financial Management and Research 2014 p183-184.
Salawo R. O. (2007). Capital industry practice and aggressive conservative working capital policies in Nigeria. Global Journal of Business Research, 1(2),109-118.
Schwartz, R. A. (1974). An economic model of trade credit. Journal of Financial and Quantitative Analysis, 9, 643-657.
Soyode, A. (1988). Constraints on trade credit development in Nigeria.
The 5 C’s of Credit When Applying for a Loan. Retrieved from http://www.mcmf.net/MCMF_BuyHouseLink2.html.
Uwah, U. E. & Asuquo, A. I. (2016). Capital budgeting processes and wealth maximization objectives: Implications for firms in Nigeria. Research Journal of Finance and Accounting, 7(10) 73-85.
Weick, K. (1989), Information systems approach to organizations: A first look at communication theory. London: McGraw-Hill.
DOI: http://dx.doi.org/10.46827/ejmms.v0i0.738
Refbacks
- There are currently no refbacks.
Copyright (c) 2020 Aniefiok Udoh Akpan, Francis Idiege Ahakiri, Theresa Mbony Ebaye
This work is licensed under a Creative Commons Attribution 4.0 International License.
The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.
Copyright © 2017-2023. European Journal of Management and Marketing Studies (ISSN 2501 - 9988) is a registered trademark of Open Access Publishing Group. All rights reserved.
This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.
