Abstract:

Working capital and their management are a primary determinant of the survival and efficiency of a company. This is because insufficient liquidity or surplus liquidity can damage the smooth processes of the company. In liquidity management matters, this apparent problem raises a lot of concern. In the service industry, however, the diagnosis was slight. The objective of this paper is, therefore, to investigate the relationship between financial performance and working capital management. The analysis is based on a selection of the ten service companies quoted on NSE between 2010 and 2019. Using fixed effect panel regression model, the study found that liquidity management is to a large degree adversely linked to financial performance metrics in the Nigerian service industry. However, only a few positive coefficients have been found because the rapid output proportion has a complementary effect (ROE, ROA, and ROCE) likewise, Working capital also has a complimentary association with ROA, ROE, and ROCE. Amongst other things, the research recommends that service companies sustain gradual financial performance by properly managing their limited resources based on this paper.