EFFECT OF CASH MANAGEMENT ON DIVIDEND POLICY OF QUOTED MANUFACTURING FIRMS IN NIGERIA

Abstract

This study examined the effect of cash management on the dividend policy of manufacturing firms in Nigeria. Specifically, the study investigated the effect of net cash flow, conversion cycle, and cash ratio on the dividend per share of the quoted manufacturing firms. The sample consists of six (6) consumer and industrial goods manufacturing firms quoted on the Nigeria Exchange Group during the period from 2011 to 2020. Multiple regression analysis was used to analyze the cross-sectional data extracted from the annual reports and financial statements of the sampled firms. Findings from the study indicate that the effect of net cash flow and cash conversion cycle on the dividend per share of the firms are positive and statistically significant while the effect of cash ratio on dividend per share is positive, but not significant statistically. The implication of these findings is that increase in net cash flow, cash conversion cycle and cash ratio will improve the firms’ liquidity and this will in turn improve the dividend per share of the firms. Based on these results, the study recommended that the consumer and industrial goods firms in Nigeria should properly manage their cash flow by analyzing the three components of cash flow, namely, cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities and ensuring that inflows are greater than their outflow at all times.