Effect of Trade Credit Management on the Financial Performance of Listed Consumer Goods Companies in Nigeria (2013 to 2022)

Abstract

The purpose of this study was to investigate the effect of trade credit on the financial performance of consumer goods companies (CGCs) that are listed in Nigeria. Expose-facto was the study design used. Twenty-one CGCs that were listed were the study population, while ten of the listed consumer goods companies were specifically chosen for sampling. Using panel OLS as the data analysis method, it was found that trade credit significantly affects ROA (p = 0.000001 < 0.05) and ROE (p = 0.000024 < 0.05). According to the study's findings, trade credit significantly affects financial performance. Hence, it was recommended that there should also be an enhancement of credit collection processes and a regular assessment of customer creditworthiness. Additionally, companies should consider offering incentives for early payment and exploring alternative financing options to reduce reliance on credit.

Keywords: Cash Conversion Cycle, Payables turnover, Performance, Receivables turnover,   Return on assets, Return on Equity