An Evaluation of Working Capital Management and Profitability in NASCON Allied Industries, Kwara State
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Background of the Study
Working capital management (WCM) refers to the management of a company’s short-term assets and liabilities to ensure operational efficiency and profitability. The primary objective of WCM is to maintain a balance between the company’s current assets and current liabilities to avoid liquidity problems and ensure that day-to-day operations run smoothly (Ibrahim & Olamide, 2023). For manufacturing companies like NASCON Allied Industries, which produces salt and other food products, effective working capital management is essential for maintaining production, meeting operational costs, and ensuring profitability.
NASCON Allied Industries, a subsidiary of Dangote Group, operates in Kwara State and faces challenges related to managing its working capital efficiently due to fluctuations in raw material costs, sales volumes, and production cycles. Effective management of working capital can help the company improve cash flow, reduce financing costs, and ultimately enhance profitability (Akinmoladun & Olatunji, 2023). However, the relationship between working capital management and profitability in NASCON Allied Industries has not been extensively studied. This research aims to evaluate how working capital management practices impact the profitability of NASCON Allied Industries in Kwara State.
Statement of the Problem
NASCON Allied Industries faces challenges related to working capital management, particularly in maintaining an optimal level of inventory, receivables, and payables. Inefficient management of working capital can lead to liquidity problems, higher financing costs, and reduced profitability. Despite the importance of working capital management, there is a lack of research on how NASCON Allied Industries manages its working capital and the effect this has on its profitability in Kwara State.
This study seeks to address this gap by evaluating the relationship between working capital management and profitability in NASCON Allied Industries, Kwara State.
Objectives of the Study
1. To evaluate the working capital management practices employed by NASCON Allied Industries in Kwara State.
2. To assess the impact of working capital management on the profitability of NASCON Allied Industries.
3. To examine how efficient working capital management can improve liquidity and financial performance at NASCON Allied Industries.
Research Questions
1. What working capital management practices are employed by NASCON Allied Industries in Kwara State?
2. How does working capital management influence the profitability of NASCON Allied Industries?
3. What effect does efficient working capital management have on the liquidity and financial performance of NASCON Allied Industries?
Research Hypotheses
1. Working capital management has a significant impact on the profitability of NASCON Allied Industries in Kwara State.
2. Efficient working capital management significantly improves the liquidity and financial performance of NASCON Allied Industries.
3. There is a significant relationship between working capital management practices and profitability at NASCON Allied Industries.
Scope and Limitations of the Study
This study will focus on the working capital management practices of NASCON Allied Industries in Kwara State and their impact on profitability. The study will analyze data from 2023 to 2025. A limitation of the study is that it will rely on secondary financial data, which may not fully capture all operational challenges faced by the company.
Definitions of Terms
• Working Capital Management (WCM): The management of a company’s short-term assets and liabilities to ensure sufficient liquidity and operational efficiency.
• Profitability: A measure of a company’s ability to generate profit relative to its revenues, assets, or equity.
• Liquidity: The ability of a company to meet its short-term financial obligations without resorting to external financing.
• Inventory Management: The process of ordering, storing, and using a company’s inventory to meet production and sales needs.
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