Firm Financial Indicators and Profitability of Manufacturing Firms in Nigeria

This study examines the determinants of profitability in Nigerian manufacturing firms, focusing on internal financial indicators. Despite their importance, these firms face financial challenges leading to market exits. The study assesses the effect of key financial indicators on profitability, proxied by profit for the year, with independent variables including liquidity, leverage, firm size, and sales growth. A sample of 16 manufacturing firms listed on the Nigerian Exchange Group was selected using judgmental sampling. Secondary data from 2013 - 2023 financial reports were analyzed using Panel Least Squares regression and the Granger Causality Test in EViews 11.0. Findings reveal that liquidity and firm size significantly enhance profitability, while leverage and sales growth show positive but insignificant relationships. The adjusted R² of 0.534 indicates that 53.4% of profitability variations are explained by the model. The study highlights theoretical, managerial, and policy implications, recommending strategic liquidity management, balanced capital structures, optimal firm size, and refined sales strategies to enhance profitability