The impact of collection period on profitability of Nigerian listed oil and gas companies

Abstract

Working capital management takes a vital role in a company’s operation, hence it is of paramount importance in determining company’s profitability. Profitability is one of the goals that every business organization wants to achieved, because each activity in the company is expected to generate profits. Therefore, components of working capital must be managed effectively in order to generate higher profits. The purpose of this study is to examine the effect of collection period (accounts receivable) management on profitability of listed oil and gas company in Nigeria, for the period of 6 years from 2013 to 2018, the variables used in the study were accounts receivable as independent variable and return on assets as dependent variable. The target population for this research were 12 listed oil and gas companies in Nigerian stock exchange website, method of data collection for this research is secondary method of data, the study employed panel data research design and utilized simple linear regression analysis. The
findings of the study show that, Account Receivable has a negative and significant impact on Profitability. Based on the findings the study recommends that, the management of listed oil and gas companies in Nigeria should maintain the current strategy of the receivables’ collection period in order to improve profitability of Nigerian listed oil and gas company.