Specific Factors Influencing Trade Credit of Foods and Beverage Manufacturing Firms in Nigeria

• Post by: eraf
• November 8, 2022
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ABSTRACT

The study examined the specific factors influencing the trade credit of foods and beverages manufacturing firms in Nigeria from 2011 to 2020. The specific objectives are, to investigate the effect of firm sales, debt financing, retained earnings, and profit on accounts payable of foods and beverages manufacturing firms in Nigeria. A sample of 7 firms was drawn from a population of 34 manufacturing firms listed on the Nigeria Stock Exchange during the period. Secondary data were collected from the annual reports and financial statements of the firms while multiple regression analysis was used to analyze the data. The overall result suggests that the entire model is significant in explaining the account payable of the foods and beverage manufacturing firms in Nigeria. Specific results indicate that firm sales, retained earnings, and profit for the year positively and significantly determined accounts payable of foods and beverage manufacturing firms in Nigeria. Also, debt financing negatively, but insignificantly determined the accounts payable of the firms. Given these results, the study recommended that foods and beverage manufacturing firms in Nigeria should improve their sales by producing high-quality products.  It was also recommended that the firms in the country should reduce the number of debts in their capital structure to access more trade credit which is cheaper and more convenient to obtain. It was further recommended that firms should implement a retention policy that will increase retained earnings. Such a retention policy will assist the firms to access trade credit from inventory suppliers. It was finally recommended that the firms should improve their profitability through an increase in revenue generation and cost reduction. Profitable firms are favorably considered by suppliers for trade credit as indicated in the findings of the study.

Keywords: Trade Credit; Foods and Beverage Manufacturing Firms; Nigeria

Authorship: Okechukwu, E. A., Prof. Ugwuanyi, B. U. and Ugwu, K. O. | FULL PDF