Title: OPERATIONAL COSTS MANAGEMENT AND FIRMS’ PROFITABILITY FOR LONG-TERM SUSTAINABILITY OF LISTED FIRMS IN NIGERIA
Authors:
Ekpoattai, Owoidigheime, Phd and Udo, Ekubiat John, Phd, Fca
Abstract:
Firms’ profitability in Nigeria is depleting due to operational high costs and some firms have relocated to other countries while others have folded up. This study is an empirical examination of operational costs management and firms’ profitability for long-term sustainability of listed firms in Nigeria. Specifically, to examine direct costs management, distribution expenses management as well as administrative expenses effect on firms’ retained profits for the year of listed firms in Nigeria. Ex-post facto research design was used in the study. The population was made up of one hundred and fifty-one (151) companies from twelve actively sub-sectors listed firms in the Nigerian Exchange Group (NGX) with traded stocks on floor of the Nigerian Exchange Group (NGX) from 2018 financial year to December 31, 2024. Purposive sampling technique was used to select the sample size of ninety-two (92) companies. Annual reports and accounts of the sampled companies were the main sources of data. The data were encoded, extracted, computed and reviewed for the required data. Multiple regression model was used to test the hypotheses. Results showed that operational costs management as proxied by direct costs management, distribution expenses management as well as administrative expenses management have positive significant influence on retained profit for the year. It was concluded in the study that operational costs management is key for firms’ sustainable profitability in Nigeria. It was recommended among others that managers of listed companies in Nigeria should track and manage direct costs, distribution expenses and administrative expenses on line-items by line items, determining their cost of operations more accurately so as to enable them to make informed decisions on making or ordering, pricing, sales and distribution. Also, firms should look inward to identify their areas of operational strengths and exploit them rather than focusing on external market prevailing conditions in Nigeria.
Keywords: Operational costs management, profitability for long-term sustainability, direct costs management, distribution expenses management as well as administrative expenses management.
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