CASH CONVERSION CYCLE MANAGEMENT AND PROFITABILITY OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA

Abstract

The Cash Conversion Cycle (CCC) is one of the measures of liquidity and represents the interaction between the components of working capital and the flow of cash within a company. Organizations frequently considered the adequate number of days it will take them to convert sales to cash. The period may affect the profitability of such organizations in terms of return on assets. The study examined the effect of Cash Conversion Cycle (CCC) management on the profitability of listed pharmaceutical companies in Nigeria. The ex-post facto research design was used in a sample of five companies. Secondary data for a period of five years (2016-2020) sourced from the annual reports and accounts of the sample companies were used. Pearson correlation and regression analysis were employed for the data analysis. The study found that the cash conversion cycle has a negative and significant effect on profitability measured by Return on Asset (ROA). The study also recommended that managers of pharmaceutical companies in Nigeria should pay more attention to proper inventory management. This may be achieved by setting a certain standard that will help to maintain inventory at an optimal level.