Cash Flow Management and Profitability Outcomes in Nigerian Healthcare Firms: An Empirical Assessment

This study examined the effect of cash flow management on the profitability of Nigerian healthcare firms between 2012 and 2022, with Return on Equity (ROE) serving as the measure of profitability. The specific objectives were to assess how Operating Cash Flow (OCF), Cash Conversion Cycle (CCC), Accounts Receivable Turnover (ART), Accounts Payable Turnover (APT), and Inventory Turnover (IT) influence ROE. Using panel data from five listed Nigerian healthcare firms and applying panel least squares regression analysis, the study found that four of the examined cash flow management variables had statistically significant effects on ROE. Operating Cash Flow (β = 0.000445, p = 0.0000), Cash Conversion Cycle (β = 0.000263, p = 0.0327), and Inventory Turnover (β = 0.007098, p = 0.0000) exhibited statistically significant positive relationships with ROE, while Accounts Payable Turnover (β = -0.004133, p = 0.0035) showed a statistically significant negative relationship, indicating their strong influence on firm profitability. In contrast, Accounts Receivable Turnover (β = -0.000331, p = 0.6912) had an insignificant effect on ROE. Descriptive statistics revealed moderate variability in firms’ cash flow management practices and financial performance levels, highlighting differences in operational efficiency across the sector. The findings suggest that effective cash flow management, particularly in operating cash, inventory, and payable management, is critical for enhancing profitability in Nigerian healthcare firms. The study concludes that healthcare firms should prioritize efficient cash flow practices alongside strategic financial planning to sustain and improve shareholder returns.