IMPACT OF FINANCIAL POSITION CHARACTERISTICS ON PROFIT AFTER TAX OF LISTED CONSUMER GOODS IN NIGERIA

Abstract

This study investigates the impact of financial position characteristics on profit after tax (PAT) of listed consumer goods firms in Nigeria. The study employed a ex-post facto research design, utilizing secondary data obtained from the audited annual financial statements of selected firms listed on the Nigerian Exchange Group (NGX) over a thirteen-year period (2011–2023). The population consisted of twenty-one (21) listed consumer goods companies as of December 2023, from which a purposive sample of ten (10) firms was selected. Data were analyzed using both descriptive and inferential statistics. Descriptive tools such as mean, minimum, maximum, and standard deviation were used to understand the distribution of the data, while panel regression analysis was employed to examine the effect of financial position characteristics—including firm size (SIZE), leverage (LEV), property, plant and equipment (PPE), and shareholders' funds (SHF)—on PAT. The results from the pooled regression analysis revealed that firm size (SIZE) had a positive and statistically significant impact on profit after tax (p = 0.0011), indicating that larger firms tend to generate higher profits. Conversely, shareholders’ funds (SHF) exhibited a significant negative effect on PAT (p = 0.0322), suggesting possible inefficiencies in capital utilization. Although leverage (LEV) showed a negative relationship with PAT, it was not statistically significant at the 5% level (p = 0.0774). Property, plant and equipment (PPE) also had a positive but statistically insignificant effect on PAT (p = 0.2742). The model yielded an R-squared value of 0.6541 and an adjusted R-squared of 0.5238, indicating that approximately 52% of the variation in profit after tax among the firms can be explained by the financial position characteristics considered. The study concludes that certain financial position variables particularly firm size and shareholders’ funds play a significant role in influencing the profitability of listed consumer goods firms in Nigeria. It recommends that corporate managers strategically optimize their financial structures and assets to improve profitability