Inventory Management Efficiency and Financial Performance of Listed Manufacturing Firms in Nigeria

Abstract

The study delves into effect of inventory management efficiency on financial performance of manufacturing firms trading listed by Nigerian Exchange Group (NGX). Employing a quantitative research design, data were collected from 37 companies over a five-year period (2021–2025). Key inventory metrics, such as, Inventory Holding Period, Inventory Turnover and Gross Margin Return on Inventory, were analysed in relation to financial performance indicators proxied by Earnings per share. Multiple linear regression analysis was deployed in evaluating the relationships, particularly on influence of inventory metrics on Earnings per share. The findings revealed that Inventory Holding Period and Inventory Turnover did not significantly influence financial performance. However, Gross Margin Return on Inventory had positive significant effect on Earnings per share. This relates inventory profitability is critical in enhancing shareholder value. The study recommends that manufacturing firms prioritize aligning inventory investment with high margin products.