MANUFACTURING FIRMS’ PROFItABILITY AND MANAGEMENT OF CREDIT A STUDY OF UNILEVER NIGERIA, PLC AND NIGERIA BREWERIES PLC

This study examines the effect of credit management on the returns of manufacturing firms using two quoted firms on the Nigerian stock exchange as a case study. This study determines whether a credit management mechanism using the receivable collection period, liquidity management, and payable payment period, have an effect on the profitability of a manufacturing firm which was measured using Return on Assets (ROA). Data were sourced from annual reports of the two firms, which provide empirical evidence for the two (2) manufacturing firms in Nigeria from 2013 to 2018. In other to achieve the objectives of the study, data collected were analyzed using descriptive statistics and Linear Regression to test for normality of variables on data obtained from annual accounts of the Companies under study. Data obtained were further analyzed by the use of financial ratios while the three hypotheses formulated were tested with ANOVA using SPSS statistical package 17.0 Version. From the analysis made, it was discovered that there is a significant relationship between credit management and the profitability of manufacturing firms, based on their Receivable collection period, Payable payment period, and Liquidity management. From the result, the researcher recommended that the sales department of the manufacturing firms must know about credit management to encourage the sales of their products and firms should not be scared of credit sales because it assists in the increase in the firm’s profitability performance. For proper management, credit should be converted to cash in the shortest possible period.