Journal of Applied Finance & Banking

An Empirical Evidence of The Impact of Inventory Management on The Profitability of Manufacturing Companies

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• Abstract

  
  

  This study examined the impact of inventory management on the profitability of a manufacturing company. A case study research design was applied on the inventory system of a reputable manufacturing company. The secondary data employed in this study was collected from the financial statement the company for the period 2015-2020, in which the data were analysed using the Multiple linear regression model. The result shows that Raw Material Cost and Storage Cost are having negative and insignificant relationship on the profitability of a manufacturing company. On the other hand, Inventory Conversion Period is having a positive and significant relationship on the Returns on Assets. The study therefore recommended that the management of manufacturing companies need to adopt proper inventory management systems in order to control raw materials costs, reduced the working capital cycle, and minimize storage cost such as holding costs, ordering costs among others hence increasing company profitability.

   

  Keywords: Inventory Management, Manufacturing companies, Inventories, Storage costs.