Working Capital Management and Firm Value: Comparative Evidence from Listed Healthcare and Industrial Goods Companies in Nigeria

Abstract

This study comparatively examined the effect of working capital management on the firm value of listed healthcare and industrial goods companies in Nigeria. An ex-post facto research design was adopted using secondary data extracted from the audited annual reports and financial statements of the sampled firms. The study population comprised 19 healthcare and industrial goods companies listed on the Nigerian Exchange Group (NGX) as of 31 December 2024. A purposive sampling technique was employed to select 12 companies (six healthcare and six industrial goods firms), with panel data spanning the period 2010–2024. Data were analyzed using descriptive statistics, correlation analysis, and panel regression techniques. Firm value was proxied by Tobin's Q, while working capital management was measured using the average collection period, average payment period, and inventory conversion period. The findings revealed that the average collection period has a positive and statistically significant effect on firm value, indicating that efficient receivables management enhances market valuation. However, the average payment period and inventory conversion period exhibited statistically insignificant effects on Tobin's Q. The study concludes that effective receivables management is a critical driver of firm value, whereas inefficient management of payables and inventory limits their contribution to enhancing market performance. The study recommends that managers of listed healthcare and industrial goods companies strengthen receivables management through improved credit policies and the use of factoring arrangements to accelerate cash collections, while also enhancing inventory and payment management practices to improve operational efficiency and maximize firm value.