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Journal of Scientific Research and  Studies

Journal of Scientific Research and Studies Vol. 4(8), pp. 198-202, August, 2017

ISSN 2375-8791

Copyright © 2017

Author(s) retain the copyright of this article

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Full Length Research Paper

Relevance of optimal cash level to profitability of firms in Nigeria manufacturing industry

 

INYIAMA Oliver Ike*, NWEZE Augustine Uchenna and NZE Donatus Okechukwu

Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria.

 

*Corresponding author. E-mail: inyiamaik@yahoo.com
 

Accepted 21 July, 2017

 

 Abstract

 

The study assessed the effect of optimal cash level on Return on Investment (ROI) of some selected Nigeria brewery firms. Ex Post facto research design was adopted and secondary data were obtained from the annual report and financial statements of Nigerian Breweries Plc, Guinness Nigeria Plc and international Breweries Plc for a period of eleven years (2005-2015). The objectives are to ascertain the effect of cash holdings on ROI. Hypothesis was formulated and analyzed, using simple regression analysis. The result reveals that corporate optimal cash level depreciates return on investment. The implication is that brewery firms’ management should hold only cash that is necessary at every point in time. Therefore, the study recommends that firms should strike at balancing their cash and cash levels so as to maintain profitability and remain relevant amidst stern competition in the industry.

Key words: Assets, investment, brewery, returns, cash.

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