INVENTORY MANAGEMENT AND PROFITABILITY OF LISTED CEMENT MANUFACTURING COMPANIES IN NIGERIA

Abstract

This study examines the impact of inventory management on the profitability of listed cement manufacturing companies in Nigeria over the period of 2006-2020. Data was collected from secondary sources through annual report and accounts of the sampled firms. A Correlational research design was adopted to investigate the impact of inventory turnover (IT) and inventory conversion period (ICP) on the gross profit margin (GPM). Firm size as well as storage cost were used as control variables. From the panel OLS regression, the study found a positive insignificant relationship between inventory turnover (IT) and gross profit margin (GPM), this implies that, cement companies in Nigeria were able to process more inventory into sales and obtained higher possibility. The study however discovered negative insignificant relationship between Inventory conversion period (ICP) and profitability, that is, when the ICP days increases the profitability of the listed cement companies in Nigeria decreases and vice versa. The relationship between SIZE and ICP was found to be negative and significant, while storage cost has direct but insignificant relationship with ICP. The study therefore, recommend that the management of the cement companies should enhance profit through avoiding holding unnecessary stock in the warehouse through employing robust inventory management techniques like Just-in-Time techniques.