Cash Conversion Cycle and Profitability of Nigerian Small and Medium-Sized Entities: An Empirical Analysis

Authors

  • Musa Muhammad Tsagem Federal College of Education (FCE), Nigeria
  • Norhani Aripin (TISSA-UUM), Universiti Utara Malaysia, Malaysia
  • Rokiah Ishak (TISSA-UUM), Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijbf2017.13.1.3

Keywords:

Cash conversion cycle, Profitability, Accounts receivable period, Inventory holding period, Accounts payable period

Abstract

The aim of this study was to investigate the relationship between cash conversion cycle and firm performance of small and medium-sized entities (SMEs) in Nigeria. SMEs are potentials for Nigerian economy growth; contributing to gross domestic product, employment generation, poverty reduction and industrialization. The study employed the panel data regression analysis using financial data from a sample of 311 Nigerian SMEs for the period 2007-2013. The findings of the study revealed a negative association between cash conversion cycle, inventory holding period and accounts payable period with SMEs profitability; and a statistically significant negative relationship between accounts receivable period and SMEs’ profitability. The findings also found a significant positive relationship between firm size, leverage, growth opportunities and firm age and SMEs’ profitability. Thus, the result of the study indicates that Nigerian SMEs with a shorter cash conversion cycle and low growth opportunities hold more cash. This study contributes to existing literature on the relationship between cash conversion cycle and SMEs’ profitability in developing economies. However, this study is limited to non-financial and non-service SMEs.

 

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Published

15-03-2018

Issue

Vol. 13 No. 1 (2017): International Journal of Banking and Finance (IJBF) Vol. 13, No.1, 2017

Section

Articles

How to Cite

Tsagem, M. M., Aripin, N., & Ishak, R. (2018). Cash Conversion Cycle and Profitability of Nigerian Small and Medium-Sized Entities: An Empirical Analysis. International Journal of Banking and Finance, 13(1), 49-69. https://doi.org/10.32890/ijbf2017.13.1.3

Research impact

Harvested 2026-09-23
13 citations, from OpenAlex — the highest of the sources checked

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Identifiers DOI 10.32890/ijbf2017.13.1.3 OpenAlex W2888454999

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