The Impact of Working Capital Management on Profitability: Evidence from Selected Small Businesses in Nigeria

Abstract

Working Capital Management (WCM) plays a major role in ensuring the continuous operation of small businesses. This research paper examines the impact of working capital management on the profitability of SMEs in Nigeria. The quantitative research method was adopted using relevant secondary data from annual financial reports of selected SMEs. Regression analysis was used to determine if the working capital (WC) variables were a significant predictor of the SMEs' profitability. The finding shows that for the period 2014-2018, there is no relationship between WCM and SME's profitability. The study recommends that Government policy should be geared towards enhancing the growth of SMEs and that SMEs should adopt prudent WC policies and strategic measures aimed at improving WC structure and, ultimately, the profitability of the SMEs in Nigeria.