Optimizing Return on Assets through Investment in Property, Plant and Equipment: Evidence from Listed Nigerian Manufacturing Companies
Joseph O. Udoayang1, Uwem E. Uwah2, Akabom I. Asuquo3
1Joseph O. Udoayang, Department of Accounting, Faculty of Management Science, University of Calabar, Nigeria.
2Uwem E. Uwah*, Department of Accounting, Faculty of Management Science, Akwa Ibom State University, Obio Akpa Campus, Nigeria.
3Akabom I. Asuquo, Department of Accounting, Faculty of Management Sciences, University of Calabar, Nigeria.
Manuscript received on June 04, 2020. | Revised Manuscript received on June 13, 2020. | Manuscript published on June 30, 2020. | PP: 50-57 | Volume-4, Issue-10, June 2020. | Retrieval Number: J09500641020/2020©BEIESP | DOI: 10.35940/ijmh.J0950.0641020
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© The Authors. Published By: Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: This study examined the extent to which investment in property, plant & equipment (PPE) made by listed manufacturing companies in Nigeria relate with the return on assets (ROA). The non-usage of composite appraisal techniques, other than traditional budgeting techniques was seen as a major problem of investment decisions on PPE. The study adopted the quantitative panel methodology of the ex post facto and correlational research design. Secondary data were extracted from the fact books of the Nigerian Stock Exchange for the period, 2013 – 2018. The number of manufacturing companies listed in the Stock Exchange during this period was 83, which was also taken as the population of the study. The sample used in the study was 69. Three hypotheses were tested at 0.05 level of significance. Multiple and simple regression analyses were used on the data collected, to find the relationship between the independent and dependent variables. The hypotheses tested indicated in the findings that property, plant and equipment had a significant relationship with return on assets of listed manufacturing firms in Nigeria when there is a joint relationship between variables of property, plant & equipment (PPE) and return on asset (ROA). Based on the findings and conclusion, it was recommended that management of manufacturing companies should ensure a holistic use of all techniques, exploring the real and growth options analyses as well as portfolio management techniques involving productive non-current assets, to earn the benefit of return on assets invested.
Keywords: Property, Plant and Equipment; Optimum Return on Assets; Capital investment; Manufacturing companies.