FIRM SURVIVAL AND ROLE OF CASH FLOW PLANNING IN OIL AND GAS FIRMS IN NIGERIA
Keywords:
Cash flow, Cash flow activities, Firms, Firm survival. Oil and gas. Cash flow, planning, Operating activities, Investing activities, Financing activities, Oil. GasAbstract
The survival of any firm is predicated on how effectively management plans and controls its cash flow. While unhealthy cash flow will not only interrupt a company’s smooth operation, it can lead to total collapse. Thus, cash flows and their management assume prominence over the management of other current assets because cash is the most important asset that fertilizes a firm's survival. This work examined firm survival and the role of cash flow planning in the oil and gas sector in Nigeria. Net cash flow from operating activities (NCFOA), Net cash flow from investing activities (NCFIA), and Net cash flow from financing activities (NCFFA) were the independent variables, while profit for the year (PFTY) was the dependent variable and proxy for firm survival. Six (6) firms were selected from the eleven (11) oil and gas firms listed on the Nigerian Exchange Group (NGX) using a simple random sampling technique. The ex-Post facto research design was adopted. Data were extracted from the annual reports of the selected firms. Three hypotheses were formulated and analyzed using regression models. The results revealed that net NCFOA has a positive and significant effect on PFTY (r = 0.56585, p = 0.000001 < 0.05). NCFIA has a negative and non-significant effect on PFTY (r = -0.221256, p = 0.7032 > 0.05), while NCFFA has a negative and significant effect on PFTY (r = -0.536447, p = 0.0000 < 0.05). The implications of the findings include that an increase in NCFOA will enhance firm survival, while survival is negatively and significantly affected by financing activities. The study recommends that Managers of oil and gas firms in Nigeria should explore more value chains, get new channels for marketing, and reduce production costs in other to generate more NCFOA. Financing cash flow activities should be properly planned and a cheaper source of funding should be sorted to reduce the cost of servicing debt
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