Cash Management Strategies and Operating Performance of Listed Manufacturing Firms in Nigeria

Abstract

This study investigates the influence of cash management strategies on the operating performance of listed manufacturing firms in Nigeria. Specifically, it assesses the extent of adoption of cash management strategies, examines their effect on both financial and non-financial performance and explores the dynamic link between cash management practices and operational outcomes. Adopting an ex-post facto research design, the study utilized secondary data obtained from the annual reports of 30 purposively selected manufacturing firms listed on the Nigerian Exchange Group (NGX) between 2012 and 2022. Descriptive and inferential statistical analyses were employed to evaluate the relationships among the study variables. The findings revealed that firms adopt varying degrees of cash management strategies: conservative (40%), moderate (33%), and aggressive (27%). Results further indicated that cash management strategies—proxied by cash and bank balances (CBB: β = 0.267, p < 0.01), cash conversion cycle (CCC: β = –0.189, p < 0.05), and cash turnover (CT: β = 0.234, p < 0.01)—significantly affect firms’ operational performance. The study concludes that efficient cash management enhances liquidity and profitability, reinforcing the importance of effective cash policies for sustaining firm performance. It recommends that manufacturing firms adopt cash management policies and strengthen their treasury and liquidity planning systems to optimize liquidity while maintaining operational efficiency.