EFFECT OF CORPORATE ASSETS ON PROFITABILITY OF BREWERY INDUSTRY IN NIGERIA
Keywords:
Non-current Assets, current Assets, profitabilityAbstract
This study sought to determine the effect of corporate assets on profitability of brewery industry in Nigeria because of poor earning potentials that have affected many manufacturing industries in Nigeria which made suppliers and investors to be reluctant in supplying and investing. This study was a time-series study that covered a period of 2014-2018 with target population of ten(10) selected breweries industry in Nigeria made up of five(5) breweries industry listed on Nigeria stock exchange and five(5) breweries industry not listed on Nigeria stock exchange. The sampling technique was purposive, in sample selection the study made use of data from annual report and accounts of Guinness Nigeria breweries Plc, Golden Guinea breweries Plc, Champion breweries Plc, international breweries Plc and Nigeria breweries Plc. A multiple regression, correlation matrix with aid of E-views output version 9.0 was used to analyse the data collected for this study. The result of this study indicated that corporate assets have negative effect on profitability (EPR/BEPR) of brewery industry in Nigeria. In particular, non-current assets have negative effect but statistical significant on profitability. Current assets also have negative effect but insignificant on profitability of brewery industry in Nigeria. The result equally revealed that non-current assets(NCA) was found to be negatively and weakly associated with EPR while current assets(CA) was found to be positively associated with EPR(profitability). The implication of the results was that one percent (1%) increase in non-current assets would automatically diminish earning power. Also one percent (1%) increase in current assets would automatically decrease earning power (profitability). Some of the recommendation(s) of this study were that brewery industry in Nigeria should be carrying assets appraisal before buying expensive non-current assets because it drains cash and increase their debts. Also authority of brewery industry in Nigeria should ensure that a lot of funds should not be allocated to current assets to prevent them from starving fund to be used in other productive sector and too little funds should not be held as a current assets, in order not to lose competitive position in the market
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