WORKING CAPITAL MANAGEMENT AND FINANCIAL DISTRESS RISK

This study examined working capital management and financial distress risk. The specific objectives were to investigate whether cash conversion cycle, current ratio, payable days and inventory days have significant effect on financial distress risk of listed manufacturing firms in Nigeria. The secondary source of data collection was adopted in the study where the purposive sampling technique was used to select a sample size of forty-six (46) of listed manufacturing firms for the study. Least Square regression analysis was used in this study and the findings revealed that cash conversion cycle, current ratio and payable days has significant effect while inventory days has no significant effect on financial distress risk of listed manufacturing firms in Nigeria. It was concluded that working capital management decision is core to financial management as it is essential to the survival of any organization; it impacts on the firm’s profitability and liquidity risk, and consequently its value. Finally, it recommended that optimal cash conversion cycle with respect to working capital, liquidity, and trade credits for firms based on sectorial analysis should be developed to enhance their performance of firms in Nigeria.