Authors:
Barisua Akpeenkon, Ledibabari Paago
Addresses:
Department of Accountancy, School of Management Sciences, Ken Saro-Wiwa Polytechnic Bori, Notem, Rivers State, Nigeria. Department of Accountancy, Ignitus Ajuru University of Education, Port Harcourt, Rivers State, Nigeria.
Abstract:
This study examines the impact of backflush accounting on the financial performance of listed manufacturing companies in Nigeria. Specifically, the study aims to examine the impact of the commodity inventory turnover ratio on Return on Assets (ROA) and evaluate the impact of the cost/revenue ratio on Return on Equity (ROE) among these companies. Backflush accounting, a streamlined accounting method that records costs after production has ended, is gaining attention for its potential to improve operational efficiency and financial performance. The study used balanced panel data derived from the annual reports of selected manufacturing companies listed on the Nigerian Stock Exchange covering the period from 2013 to 2019. A random effect panel regression estimation technique was used, and the analysis was performed using E-View's version 10. The empirical results showed that the inventory turnover ratio has a significant positive effect on both ROA and ROE, indicating that effective inventory management contributes to improved profitability. However, a negligible negative effect on earnings per share (EPS) was observed, suggesting that the benefits may not immediately translate into shareholder value. Based on these findings, the study recommends that manufacturing companies in Nigeria adopt backflush accounting practices, as it has been shown to improve financial performance and promote better resource management.
Keywords: Backflush Accounting; Financial Performance; Inventory and Turnover Ratio; Operational Efficiency; Return on Equity (ROE); Business Environment; Accounting Techniques; Technological Advancements.
Received: 20/07/2024, Revised: 14/09/2024, Accepted: 29/10/2024, Published: 05/03/2025
DOI: 10.64091/ATITP.2025.000107
AVE Trends in Intelligent Technoprise Letters, 2025 Vol. 2 No. 1 , Pages: 15-29