Cashflow Management and Financial Performance of Industrial Goods Sector in Nigeria

Abstract

The primary objective of this research is to investigate the impact of cash flow management on the financial performance of the industrial goods sector in Nigeria. Specifically, the study focuses on assessing the influence of cash flows from operating activities, cash flows from investing activity, and cash flows from financing activities on return on equity of selected industrial good firms in Nigeria. Ex post facto research is a study that investigates possible cause-and-effect relationships by analyzing data from events that have already occurred, without manipulating any variables. The panel least squares regression techniques were employed to examine the implicit relationship between the variables. The study found a significant negative relationship between cash flow from investing activities and financial performance. Additionally, cash flow from financing activities does not show a statistically significant relationship with financial performance in this sector. These findings highlight important considerations regarding the role of cash flow management in driving financial outcomes. In conclusion, the research underscores the importance of a balanced approach to cash flow management across all activities, operating, investing, and financing to achieve sustainable financial performance in the industrial goods sector. Firms should prioritize investments that align with their strategic objectives while maintaining efficient operations to optimize financial outcomes. It is recommended that firms focus on selecting investment projects with higher potential returns and avoid inefficient or excessive investments that do not align with their strategic goals.