Liquidity Management on Firm Financial Performance

The study was conducted to evaluate the relationship between liquidity and profitability of some selected manufacturing companies in Nigeria. Liquidity management, which is very casual for the survival of a company, should not impair profitability. Companies with an improper level of liquidity management sooner or later will be force out of operation. Therefore, this study assessed the relationship that exists between liquidity and profitability of manufacturing firms dealing with consumer goods. Research design for the study was historical and descriptive; population consist of all the 25 consumer producing manufacturing firms in Nigeria. Simple size consist of 5 selected manufacturing firms which are; Nestle Plc, Guinness Nigeria, Nigeria Breweries, Leventis Plc and Lafarge Cements. The study used secondary data, which was extracted from the annual financial statement of the sampled company listed on the Nigeria Stock Exchange with covers 6 years (2010-2015). Correlation analysis and the three alternative regression methods; pooled effect, fixed effect and the random effect. It was revealed that working capital turnover and acid test ratio are positively related to profit.