EFFECT OF FUNCTIONAL COMPETENCIES ON PROFITABILITY OF FIRMS IN NIGERIA MANUFACTURING FIRMS

Abstract

The study examined the effect of functional competencies on profitability of Nigerian manufacturing firms. The study specifically examined the; effect of total production cost to turnover (TPCT) ratio on profit for the year (PFY) of firms in Nigeria manufacturing firms, effect of marketing expenses to turnover (MET) ratio on profit for the year (PFY) of Nigeria manufacturing firms, effect of total personnel cost to total production cost (TPCPC) ratio on profit for the year (PFY) of firms in the Nigeria manufacturing industries and also evaluated the impact of total equity to total asset (TETA) ratio on profit for the year (PFY) of Nigeria manufacturing firms. The study involving panel data descriptive statistics deployed the Jarque-Bera test statistics. Result of the analysis shows that effort to ascertain the effect of Total Production Cost to Turnover ratio on profit for the years of firms in Nigeria manufacturing sector indicates that the independent variable TPCT ratio has insignificant and negative effect on the dependent variable PFY and same was properly justified by the effects specifications on the table. Sequel to the result of regression using panel least square technique, the marketing expenses to turnover ratio with 44.72 coefficient of variation, produced (0.037003) positive effect on profit for the year. Relatedly, the t-statistics of MET of 0.021289<2, prompted the conclusion that there is positive effect of MET on PFY, the effect is not significant. In line with the R-squared coefficient of 0.447252 where probability of TPCPC >0.05, the result of the panel least square regression shows that TPCPC has negative effect on PFY, however, with the t-statistic of TPCPC, which stood at -0.523545<2, there was a conclusion that though the Total Personnel Cost to Production Cost Ratios of firms in Nigeria manufacturing sector, has negative effect on the Profit for the year, the effect is not significant. Premised on the product of the data analysis, the Total equity to total asset ratio of Nigeria manufacturing firms with 44.72% variation in Profit for the years of the firms, produces effect specifications of 0.038827 which is adjudged positive. However the t-statistic at 0.690726<2 with the probability of 0.4906>0.05, speaks for the acceptance of null hypothesis hence the conclusion that Total equity to Total asset ratio does not have significant effect on PFY. Based on the findings, the researcher recommends that there is need for recognition of functional competencies as crucial resources, efficacy Enhancement Strategy for the production system and human capital strategy