Asset efficiency and financial performance of listed non-financial firms in Nigeria

Abstract

The financial performance of non-financial firms has piqued the curiosity, remarks, and attention of financial professionals, researchers and the general public. However, rating the most successful organizations has always been established to be a challenging assignment for many because a firm may have a high level of financial performance while also having difficulty managing its assets efficiently (Simbolon 2020). With the growth of the capital market, evaluating financial performance has become an important topie in finance. The purpose of financial metrics appears to be critical in assessing the firm's performance (Mahmoudi, 2013). According to Oguna (2014), (2014), financial performance analysis analyzes the firm's financial strengths and weaknesses by correctly establishing linkages between the components of the statement of financial position and income statement. This is accomplished by selecting the information relevant to the choice under discussion from the entire information contained in the financial statements, arranging the information so that critical relationships are highlighted, and interpreting and drawing inferences and conclusions. Asset management is one of the many aspects that influence the financial success of listed non-financial companies (Purba & Bimantara, 2020). According to Enekwe (2015), operational efficiency is one of the aspects on which an entity's financial performance is heavily reliant. As a result, this study sought to examine the relationship between asset efficiency and financial performance of Nigerian non-financial firms. Efficient asset management is a critical aspect in improving the financial performance of non-financial firms which can transpose the sector to significantly contribute to the growth
ABSTRACT
This study explores the impact of asset efficiency on the financial performance of Nigerian listed non-financial firms. Total asset turnover ratio, non-current asset turnover ratio, inventory turnover ratio, and receivable turnover ratio were the asset efficiency indicators evaluated. Secondary data were gathered from the audited annual reports of the 40 non-financial firms sampled for this study for the period 2015-2022. Panel data least square multiple regression was used to test the hypotheses. According to the findings of this study, total asset turnover ratio, non-current asset turnover ratio, and inventory turnover ratio show a positive but statistically insignificant link with the financial performance of Nigerian non-financial firms. The findings, on the other hand, show that the turnover ratio and business size have a positive and statistically significant relationship with the financial performance of the firms analyzed. The study concludes that asset efficiency has a favorable effect on the financial performance of Nigerian non-financial firms. The study therefore, recommends among others that non-financial firms in Nigeria should efficiently maintain and use their different forms of assets to generate more income for the organization in order to promote higher financial performance.