OVERTRADING: ANALYSIS OF ITS EFFECTS ON FINANCIAL SUSTAINABILITY IN NIGERIAN MANUFACTURING COMPANIES

OVERTRADING: ANALYSIS OF ITS EFFECTS ON FINANCIAL SUSTAINABILITY IN NIGERIAN MANUFACTURING COMPANIES

Author by Dr. Samuel Olaoye

Journal/Publisher: Journal Of Critical Reviews

Volume/Edition: 7

Language: English

Pages: 6964 - 6978

Abstract

Several businesses exist for the main aim of making and maximizing profit into the foreseeable
future, as in going concern. However, the going concern aim of a company can be unachievable if the business
becomes careless about its financial sustainability as well as factors that affect it. Several organisations have
liquidated as a result of mismanagement of their current and non- current assets and liabilities. The study
employed ex post-facto research design. The population of the study was the thirty-three (33) manufacturing
companies quoted on the Nigerian Stock Exchange (NSE) as at the end of 2018. Purposive and convenient
sampling techniques were adopted to select twenty-one (21) companies from the population of the study, these are
companies that have been consistently listed all through the fifteen years (2004-2018) studied in the research.The data were analyzed using descriptive and inferential statistics employing regression analysis. The studyfound out that overtrading had a statistical significant effect on financial sustainability when financialsustainability was measured with debt-equity ratio. F (9, 120)= 9.40, Adj. R2= 0.0369, p < 0 xss=removed xss=removed> 0.1. Whereas, when financial sustainability was measured with Earnings to Interest and Principal Expenses Ratio, the models were statistically not significant. The study
concluded that overtrading impacts on the financial sustainability of listed manufacturing companies when financial sustainability was measured with debt-to-equity ratio. The study also concluded that size play a vital role on the relationship between overtrading and financial sustainability when the company was not yet engage in overtrading activities.


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