Effect of Non-Current Assets on The Financial Performance of Manufacturing Firms in Nigeria

Abstract

The study examined the effect of non-current assets on the financial performance of manufacturing firms in Nigeria. The independent variable is non-current assets, proxied by the log of non-current assets, with two control variables (firm size and leverage), while the dependent variable is financial performance, proxied by return on assets (ROA). The ex-post facto research design made use of secondary data drawn from the annual reports and accounts of four (4) companies in the listed consumer goods sector of the Nigerian economy, covering a period of ten (10) years from 2010 to 2019, both years inclusive. The theories of this study were anchored in dynamic theory and organic theory. The E-Views version 9.0 software statistical package was used to run the panel ordinary least squares (OLS) for the study. The multiple regression model was applied to determine the extent of the effect of the independent variable (non-current assets) on the dependent variable (financial performance) of the companies under investigation. The regression result revealed that non-current assets (NCA) have a positive but insignificant effect on the return on assets (ROA) of listed consumer goods companies in Nigeria. Based on the findings, the researchers recommended that management ensure that the amount spent on acquiring non-current assets for the company is monitored and controlled in order to increase their financial performance (profit). Also, the government regulatory body for companies (CAMA) should make sure that only a small part of the profit generated will be used in the acquisition of property, plant, and equipment (PP & E) for the company.