Inventory Valuation Methods and Financial Performance Consumer Goods Companies in Nigeria
Vol.4 Issue 2
The purpose of this study was to investigate the influence of inventory valuation methods on the financial performance of consumer goods companies in Nigeria. The objectives of the study were specifically, to determine the extent to which FIFO and Weighted Average relate to financial performance. The population of the study consists of 9 consumer goods companies listed in the Nigerian Stock Exchange. The sample size was drawn from the study population of one hundred and fifty-two (153) respondents, seventeen (17) from each of the companies. The respondents were top executive managers. However, only one hundred and fifty-one (151) respondents provided data for the study. The primary data was collected through the use of questionnaire while the secondary data was from the company’s financial statement within the period of 2013-2018. Data collected were analyzed using descriptive statistics of mean, standard deviation, frequency distribution and percentages. Similarly, bivariate inferential statistics of Pearson Product Moment Correlation (PPMC) was used to determine the relationship between the hypothesized variables. Multiple regression analysis was used to test the combined effect of all the dimensions on each on each of the measures. These analyses were done with the aid of the statistical package for social sciences (SPSS version 22.0). Findings showed that that FIFO and Weighted average valuation methods positively and significantly influenced the two measures of financial performance. The study found a significant and positive relationship between inventory valuation method and the financial performance of consumer goods companies in Nigeria. The study recommends that management should at all-times solve replenishment problems associated with the importation of goods, while options should be available for locally sourced ones. Again, detailed investigation should be undertaken before approval is given on any adjustment of inventory balance and also audit report should be sent to store on a daily basis.
