The objective of the study was to analyze the effect of working capital management on the profitability of banks in Nigeria for 5-years period (2010-2014). This is imperative since inefficient working capital management may not only reduce profitability but also lead to financial crises and its associated effects. In an attempt to achieve the broad objective of this study, three hypotheses were raised in the study for validation and a sample of ten (10) banks was used in the study. Data for the analysis was collected from the annual report and statements of account of the two banks sampled in the study covering the period of 2010 to 2014. The multiple regression method of analysis was adopted in the study and the result of the analysis was facilitated using the statistical package for social and management sciences (SPSS 20.0). In the model cash ratio (CR) proxy for liquidity, the ratio of current assets to total assets (TCATAR) and the ratio of current liabilities to total assets (CLTAR) were the independent variables, while return on assets (ROA) proxy for bank’s profitability was the dependent variable. The result of the analysis at 5% level of significance shows clearly that, banks’ liquidity (CR) does not have a significant relationship with profitability (ROA). In addition, there is a positive but insignificant relationship between profitability and the ratio of current asset to total asset and the ratio of current liabilities to total assets does not have a significant relationship with profitability. Among others, the study recommends that banks should not solely concentrate on the profit maximization strategies but should also adopt measures that will ensure effective working capital management
TABLE OF CONTENTS
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Scope of the Study
1.7 Justification of the Study
1.8 Operational Definition of Terms
CHAPTER TWO – LITERATURE REVIEW
2.1 Conceptual Review
2.1.2. Working Capital Management
2.1.3 Working Capital and Liquidity
2.1.4 Working Capital Policies
2.1.5. Importance of Working Capital Management.
2.2 Theoretical Literature
1) Working Capital Composition and the Pecking Order Theory
2.) Theories of Liquidity and Liquidity Management
a) Anticipated Income Theory
b) Shiftability Theory
c) Liability Management Theory
d) Commercial Loan Theory
2.3 Empirical Review
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Study Area
3.4 Population of the Study
3.5 Sample Size and Sampling method
3.6 Data Type and Instrument for Collecting data
3.7 Validity and reliability of research Instrument
3.8 Model Specification
3.9 Method of Data Analysis
CHAPTER FOUR – PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation of Data
4.2 Presentation of Result
4.3 Analysis of Result
4.3 Interpretation of Result
4.4 Discussion of Findings
CHAPTER FIVE – SUMMARY OF FINDINGS, CONCLUSION, AND RECOMMENDATIONS
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
5.4 Suggestions for Future Studies
REFRENCES
APPENDIX
