Corporate liquidity as a predictor variable of firm earnings in the Nigerian agricultural sector

https://doi.org/10.35912/ijfam.v7i1.2788
Published: Jun 18, 2025

Abstract:

Purpose: This study examines the effect of corporate liquidity on the earnings of listed agricultural firms in Nigeria. The proxies of corporate liquidity are net working capital and cash level.

Method: This study adopted an ex-post facto research strategy. The population consisted of five listed agricultural firms in Nigeria, and census sampling was applied in the study. Secondary data were gleaned from the annual reports of firms from 2014 to 2023. A fixed-effects estimation model was used to test the hypotheses.

Results: Net working capital has a significant positive effect on the earnings of listed agricultural firms in Nigeria, and cash level has a significant positive effect on the earnings of listed agricultural firms in Nigeria.

Conclusions: Firms that can optimize their liquidity positions are more agile in taking advantage of business opportunities, such as acquiring raw materials at favorable prices or capitalizing on market demand surges.

Limitations: A key limitation of this study is its relatively small sample size, as it exclusively examines listed agricultural firms in Nigeria. Consequently, these findings may not be fully generalizable to unlisted agricultural firms.

Contribution: This study contributes to the literature by filling a critical gap by focusing on sector-specific profitability metrics, as it offers a new perspective on the liquidity-performance relationship in Nigerian agricultural firms.

Implications: Financial managers of listed agricultural firms in Nigeria need to adopt proactive working capital management strategies by ensuring efficient accounts receivable collection and maintaining a balanced accounts payable structure.

Keywords:
1. Corporate Liquidity
2. Firm Earnings
3. Listed Agricultural Firms
Authors:
1 . Igbodo Ofulue
Nnamdi Azikiwe University, Awka, Nigeria
2 . Juliet Ogbonneya Okike
Ebonyi State University, Abakaliki, Ebonyi State, Nigeria
3 . Gilbert Ogechukwu Nworie
Ukoro Odah Statistical Consult, Amansea, Anambra State, Nigeria
4 . Fidelia Nkechinyere Nworie
Ukoro Odah Statistical Consult, Amansea, Anambra State, Nigeria
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How to Cite
Ofulue, I., Okike, J. O., Nworie, G. O., & Nworie, F. N. (2025). Corporate liquidity as a predictor variable of firm earnings in the Nigerian agricultural sector. International Journal of Financial, Accounting, and Management, 7(1), 77–89. https://doi.org/10.35912/ijfam.v7i1.2788
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Vol. 7 No. 1 (2025): June
Articles
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References

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    Bello, M. M., Yahaya, J. U., & Adamu, I. (2024). An analysis of sustainable agricultural productivity and food security in Nigeria. Journal of Political Discourse, 2(2), 45-60.

    Chika, O. V., Promise, E., & Werikum, E. (2022). Influence of liquidity and profitability on profits growth of Nigerian pharmaceutical firms. Goodwood Akuntansi dan Auditing Reviu, 1(1), 1-13. doi:https://doi.org/10.35912/gaar.v1i1.1318

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    Frances, C. C., & Nworie, G. O. (2025). Firm Size: A Strategic Booster Of Shareholder Wealth Maximisation Among Listed Agricultural Firms In Nigeria. International Journal of Academic Accounting, Finance & Management Research, 9(4), 7-57.

    Gerio, P., & Wahome, N. (2020). Influence of liquidity management on financial performance of agricultural firms listed in Nairobi Securities. The Strategic Journal of Business & Change Management, 7 (3), 354 364. Page:-355- The Strategic Journal of Business & Change Management. ISSN, 2312-9492. doi:http://dx.doi.org/10.61426/sjbcm.v7i3.1676

    Ghani, U., & Hossain, M. K. (2023). The Role and Importance of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume in Keynes's General Theory. International Journal of Science and Business, 20(1), 58-70. doi:https://doi.org/10.58970/IJSB.2056

    Habib, A. M., Yang, G.-l., & Cui, Y. (2024). Do competitive strategies affect working capital management efficiency? Business Process Management Journal, 30(5), 1716-1736. doi:https://doi.org/10.1108/BPMJ-12-2023-0953

    Huynh, T. X. T., Nguyen, T. T. H., & Nguyen, C. V. (2025). The impact of working capital management on the financial performance of listed enterprises: an empirical evidence from Vietnam. Cogent Business & Management, 12(1), 2473033. doi:https://doi.org/10.1080/23311975.2025.2473033

    Ikwuo, A. K., Ukoha, A. C., & Nworie, G. O. (2025). Cloud accounting: strategic advantage for maximising Shareholder wealth in Nigeria’s pharmaceutical sector. Journal of Governance and Accountability Studies, 5(1), 1-16. doi:https://doi.org/10.35912/jgas.v5i1.2529

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    Nam, N. H. P., & Tuyen, T. T. M. (2024). Impact of liquidity on capital structure and financial performance of non-financial-listed companies in the vietnam stock market. Future Business Journal, 10(1), 126. doi:https://doi.org/10.1186/s43093-024-00412-7

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    Nguyen, T. T. C., Le, A. T. H., & Van Nguyen, C. (2024). The Impact of Liquidity and Corporate Efficiency on Profitability. Emerging Science Journal, 8(1), 180-191. doi:http://dx.doi.org/10.28991/ESJ-2024-08-01-013

    Nworie, G. O., & Agwaramgbo, J. C. (2023). Determining the Financial Performance of Tier-1 Deposit Money Banks in Nigeria Using Bank Liquidity. International Journal of Academic Management Science Research, 7(2), 166-181.

    Nworie, G. O., & Ofoje, B. C. (2022). Liquidity as an antecedent to the financial performance of listed food and beverages firms in Nigeria. International Journal of Advances in Engineering and Management, 4(12), 192-200. doi:https://doi.org/10.35629/5252-0412192200

    Nwuba, C. O., & Okoli, C. C. (2022). Challenges and prospects of agribusiness in Nigeria: The missing link. International Journal of Trend in Scientific Research and Development, 6(5), 568-577.

    Odalo, S. K., & Achoki, G. (2016). Liquidity and financial performance in agricultural firms listed in the Nairobi Securities Exchange in Kenya. International Journal of Business and Social Science, 7(7), 57-65.

    Odalo, S. K., Achoki, G., & Njuguna, A. (2016). Influence of liquidity on the financial performance of agricultural firms listed at the Nairobi securities exchange. American Journal of Finance, 1(3), 35-53.

    Orajekwe, J. C., & Ogbodo, O. C. (2023). Firm-specific characteristics and environmental disclosure of energy firms in Sub-Saharan Africa. International Journal of Financial, Accounting, and Management, 5(2), 251-264. doi:https://doi.org/10.35912/ijfam.v5i2.1601

    Oranefo, P. C., & Egbunike, C. F. (2023). Accounts Payable Turnover and Firm Performance of Quoted Manufacturing Firms in Nigeria. International Journal of Accounting and Management Information Systems, 1(1), 45-65. doi:https://doi.org/10.35912/ijamis.v1i1.1247

    Rezende, F. (2015). Demand for financial assets and monetary policy: a restatement of the liquidity preference theory and the speculative demand for money. Journal of Post Keynesian Economics, 38(1), 64-92. doi:https://doi.org/10.1080/01603477.2015.1065672

    stockopedia.com. (n.d.). Cash to Assets Ratio. Retrieved from https://www.stockopedia.com/ratios/cash-to-assets-ratio-latest-144/

    Ugwu, I., Ekwochi, E., & Ogbu, C. (2021). Logical consequence of liquidity management on firm profitability. IJAMSR, 5, 265-279.

    Vladimirova, D., Schiereck, D., & Stroh, M. (2023). Managing Liquidity of Emerging Markets Corporate Debt. Journal of Fixed Income, 33(1). doi:https://doi.org/10.3905/jfi.2023.1.159

    Wahab, A. O., Akinola, A. O., & Dare, T. C. (2022). Corporate attributes and financial performance of listed agricultural and agro-allied companies in Nigeria. International Journal of Accounting Research, 7(2), 103-111.

    Waitherero, K. F., Muchina, S., & Macharia, S. (2021). The role of liquidity risk in augmenting firm value: lessons from savings and credit cooperatives in Kenya. International Journal of Financial, Accounting, and Management, 2(4), 295-304. doi:https://doi.org/10.35912/ijfam.v2i4.340

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  2. Bagana, T. K., Lateef, D., Ene, E. E., & Emeka, E. (2024). Effect of Liquidity Management on Financial Performance of Nigerian Consumer Goods Manufacturing Firms. International Journal of Research and Scientific Innovation, 11(6), 210-229. doi:https://doi.org/10.51244/IJRSI.2024.1106018
  3. Bello, M. M., Yahaya, J. U., & Adamu, I. (2024). An analysis of sustainable agricultural productivity and food security in Nigeria. Journal of Political Discourse, 2(2), 45-60.
  4. Chika, O. V., Promise, E., & Werikum, E. (2022). Influence of liquidity and profitability on profits growth of Nigerian pharmaceutical firms. Goodwood Akuntansi dan Auditing Reviu, 1(1), 1-13. doi:https://doi.org/10.35912/gaar.v1i1.1318
  5. Egbunike, C. F., & Oranefo, P. C. (2023). Macroeconomic factor, firm characteristics and inventory holding in Nigeria: A quantile regression approach. International Journal of Financial, Accounting, and Management, 5(1), 1-17. doi:https://doi.org/10.35912/ijfam.v5i1.1096
  6. Frances, C. C., & Nworie, G. O. (2025). Firm Size: A Strategic Booster Of Shareholder Wealth Maximisation Among Listed Agricultural Firms In Nigeria. International Journal of Academic Accounting, Finance & Management Research, 9(4), 7-57.
  7. Gerio, P., & Wahome, N. (2020). Influence of liquidity management on financial performance of agricultural firms listed in Nairobi Securities. The Strategic Journal of Business & Change Management, 7 (3), 354 364. Page:-355- The Strategic Journal of Business & Change Management. ISSN, 2312-9492. doi:http://dx.doi.org/10.61426/sjbcm.v7i3.1676
  8. Ghani, U., & Hossain, M. K. (2023). The Role and Importance of Liquidity Preference, Marginal Efficiency of Capital, and Marginal Propensity to Consume in Keynes's General Theory. International Journal of Science and Business, 20(1), 58-70. doi:https://doi.org/10.58970/IJSB.2056
  9. Habib, A. M., Yang, G.-l., & Cui, Y. (2024). Do competitive strategies affect working capital management efficiency? Business Process Management Journal, 30(5), 1716-1736. doi:https://doi.org/10.1108/BPMJ-12-2023-0953
  10. Huynh, T. X. T., Nguyen, T. T. H., & Nguyen, C. V. (2025). The impact of working capital management on the financial performance of listed enterprises: an empirical evidence from Vietnam. Cogent Business & Management, 12(1), 2473033. doi:https://doi.org/10.1080/23311975.2025.2473033
  11. Ikwuo, A. K., Ukoha, A. C., & Nworie, G. O. (2025). Cloud accounting: strategic advantage for maximising Shareholder wealth in Nigeria’s pharmaceutical sector. Journal of Governance and Accountability Studies, 5(1), 1-16. doi:https://doi.org/10.35912/jgas.v5i1.2529
  12. Ishak, K., & Selamat, M. I. (2025). Liquidity and Firm Market Value: The Moderating Role of Firm Size. Shirkah: Journal of Economics and Business, 10(1), 62-77. doi:https://doi.org/10.22515/shirkah.v10i1.755
  13. Isibor, O. N., Ofor, T., & Sunday, D. (2024). Market Risk and Firm Financial Performance of Agricultural and Oil and Gas Firms in Nigeria. Journal of Accounting and Financial Management, 10, 189-218. doi:https://doi.org/10.56201/jafm.v10.no4.2024.pg189.218
  14. Jayathilaka, A. K. (2020). Operating profit and net profit: measurements of profitability. Open Access Library Journal, 7(12), 1-11. doi:https://doi.org/10.4236/oalib.1107011
  15. J?drzejczak-Gas, J. (2017). Net working capital management strategies in the construction enterprises listed on the NewConnect market. Procedia Engineering, 182, 306-313. doi:https://doi.org/10.1016/j.proeng.2017.03.098
  16. Kinyua, F., & Fredrick, W. (2022). Liquidity risk and financial performance of manufacturing firms listed at Nairobi Securities Exchange. International Academic Journal of Economics and Finance, 3(8), 1, 24(2).
  17. Laghari, F., Chengang, Y., Chenyun, Y., Liu, Y., & Xiang, L. (2022). Corporate liquidity management in emerging economies under the financial constraints: evidence from China. Discrete Dynamics in Nature and Society, 2022(1), 6086191. doi:https://doi.org/10.1155/2022/6086191
  18. Lasisi, I. O., Dikki, C. A., & Okpanachi, J. (2017). Empirical determinant of firm’s profitability: evidence from listed agricultural companies in Nigeria. Sahel Analyst: Journal of Management Sciences, 15(8), 66-88.
  19. Lukic, R. (2023). Influence of net working capital on trade profitability in Serbia. European Journal of Interdisciplinary Studies, 15(1), 48-67.
  20. Mertzanis, C., Ellili, N., Marashdeh, H., & Nobanee, H. (2025). Corporate governance, enforcement institutions and corporate liquidity in the MENA region. International Journal of Emerging Markets, 20(3), 1019-1041. doi:https://doi.org/10.1108/IJOEM-11-2021-1673
  21. Nam, N. H. P., & Tuyen, T. T. M. (2024). Impact of liquidity on capital structure and financial performance of non-financial-listed companies in the vietnam stock market. Future Business Journal, 10(1), 126. doi:https://doi.org/10.1186/s43093-024-00412-7
  22. Ndruru, F. (2025). The Role of Liquidity Management in Enhancing Corporate Financial Stability: a Systematic Literature Review on Cash Reserves and Marketable Securities Strategies. PRODUCTIVITY: Journal of Integrated Business, Management, and Accounting Research, 2(1), 09-17. doi:https://doi.org/10.54373/product.v2i1.51
  23. Nguyen, T. T. C., Le, A. T. H., & Van Nguyen, C. (2024). The Impact of Liquidity and Corporate Efficiency on Profitability. Emerging Science Journal, 8(1), 180-191. doi:http://dx.doi.org/10.28991/ESJ-2024-08-01-013
  24. Nworie, G. O., & Agwaramgbo, J. C. (2023). Determining the Financial Performance of Tier-1 Deposit Money Banks in Nigeria Using Bank Liquidity. International Journal of Academic Management Science Research, 7(2), 166-181.
  25. Nworie, G. O., & Ofoje, B. C. (2022). Liquidity as an antecedent to the financial performance of listed food and beverages firms in Nigeria. International Journal of Advances in Engineering and Management, 4(12), 192-200. doi:https://doi.org/10.35629/5252-0412192200
  26. Nwuba, C. O., & Okoli, C. C. (2022). Challenges and prospects of agribusiness in Nigeria: The missing link. International Journal of Trend in Scientific Research and Development, 6(5), 568-577.
  27. Odalo, S. K., & Achoki, G. (2016). Liquidity and financial performance in agricultural firms listed in the Nairobi Securities Exchange in Kenya. International Journal of Business and Social Science, 7(7), 57-65.
  28. Odalo, S. K., Achoki, G., & Njuguna, A. (2016). Influence of liquidity on the financial performance of agricultural firms listed at the Nairobi securities exchange. American Journal of Finance, 1(3), 35-53.
  29. Orajekwe, J. C., & Ogbodo, O. C. (2023). Firm-specific characteristics and environmental disclosure of energy firms in Sub-Saharan Africa. International Journal of Financial, Accounting, and Management, 5(2), 251-264. doi:https://doi.org/10.35912/ijfam.v5i2.1601
  30. Oranefo, P. C., & Egbunike, C. F. (2023). Accounts Payable Turnover and Firm Performance of Quoted Manufacturing Firms in Nigeria. International Journal of Accounting and Management Information Systems, 1(1), 45-65. doi:https://doi.org/10.35912/ijamis.v1i1.1247
  31. Rezende, F. (2015). Demand for financial assets and monetary policy: a restatement of the liquidity preference theory and the speculative demand for money. Journal of Post Keynesian Economics, 38(1), 64-92. doi:https://doi.org/10.1080/01603477.2015.1065672
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  33. Ugwu, I., Ekwochi, E., & Ogbu, C. (2021). Logical consequence of liquidity management on firm profitability. IJAMSR, 5, 265-279.
  34. Vladimirova, D., Schiereck, D., & Stroh, M. (2023). Managing Liquidity of Emerging Markets Corporate Debt. Journal of Fixed Income, 33(1). doi:https://doi.org/10.3905/jfi.2023.1.159
  35. Wahab, A. O., Akinola, A. O., & Dare, T. C. (2022). Corporate attributes and financial performance of listed agricultural and agro-allied companies in Nigeria. International Journal of Accounting Research, 7(2), 103-111.
  36. Waitherero, K. F., Muchina, S., & Macharia, S. (2021). The role of liquidity risk in augmenting firm value: lessons from savings and credit cooperatives in Kenya. International Journal of Financial, Accounting, and Management, 2(4), 295-304. doi:https://doi.org/10.35912/ijfam.v2i4.340