Receivables and Tax Payable in Manufacturing Companies: Panel Analysis Reactions

Document Type : Review article

Author

Department of Accounting, AL-hikmah University, Ilorin, Oko Erin, Nigeria

10.22067/ijaaf.2025.45464.1464

Abstract

This study examined the effect of receivables on taxes payable in listed Nigerian manufacturing companies. Data collected from the annual publications of selected thirty-four (34) Nigeria manufacturing companies between 2011 and 2023 were analysed with analytical tools such as pooled regression, fixed effects and random effects, and the Hausman test. The heteroskedasticity and VIF were also employed to determine the multicollinearity in the variables employed. Pearson Product Moment correlation (PPMC) was also used to determine the relationship among the variables. It was noted from the results attained from the analysis that receivables have a positive effect on payable taxes. It was invariably discovered that PBT, taxable income and revenue positively influenced tax payable. Still, total assets were negative, and audit committee quality negatively affected tax payable because a one percent increment in total assets and audit committee quality brought down tax payable. Conclusively, receivables significantly positively affect taxes payable in Nigerian manufacturing companies. It is recommended that receivable monitoring mechanisms or devices should be put in place by the government to monitor all the receivables of the organization to prevent artificial dwindling in tax payable and to enhance transparency in the financial reporting of manufacturing companies which will contribute to a more accurate and standardized assessment of tax implications.

Keywords

Main Subjects


  1. Abubakar, Y. and Olowe, G. J. (2019). Accounts receivable management and financial performance of selected quoted firms in Nigeria. International Journal of Research and Scientific Innovation (IJRSI), 6(4), pp. 141-145.
  2. Adeboboye, R. O., Solanke, F. T., Olaniyan, N. O. and Olaniyi Rufiyat Abosede. (2022). A comparative analysis of effects of account receivables management on performance of Nigerian quoted manufacturing. Fuoye Journal of Accounting and Management, 5(1), pp. 61–74.
  3. Adegbite, T. A. (2020). The Effects of IFRS Adoption on Taxation. Financial Sciences, 25(4), pp. 1–15. https://doi.org/10.15611/fins.2020.4.01
  4. Adegbite, T. A. and Adegbayibi, A. T. (2023). Kardan journal of economics and management sciences (KJEMS). Management, 6(2), 26-42. https://doi.org/10.22067/ijaaf.2023.43618.1291
  5. Adegbite, T. A. and Fasina, H. T. (2019). Taxation and revenue generation in Nigeria. Accounting and Taxation Review, 3(1), pp. 82-92.
  6. Adegbite, T. A. and Inyada, S. J. (2024). Working capital and tax payable : analysis of interrelationship in manufacturing companies. Facta Universitatis Series: Economics and Organization, 21(1), pp. 25–45.
  7. Adegbite, T. A., Bojuwon, M. and Adegbite, A. F. (2019). The impact of ICT on taxation: evidence from Oyo State. Copernican Journal of Finance & Accounting, 8(4), pp. 7-25. https://doi.org/10.12775/CJFA.2019.015
  8. Adejare, A. T. (2015). The analysis of the effect of corporate income tax (CIT) on revenue profile in Nigeria. American Journal of Economics, Finance and Management, 1(4), pp. 312-319.
  9. Adejare, A. T. and Olatunji, O. C. (2021). Analysis of the impact of non-oil taxation on foreign direct investment and economic services in Nigeria. Studia Universitatis Vasile Goldiș Arad, Seria Științe Economice, 31(1), pp. 60-83. https://doi.org/10.2478/sues-2021-0004
  10. Adejarea, A. T. and Akandeb, S. S. (2018). The assessment of the impact of taxation on local government revenue in Oyo State. Noble International Journal of Economics and Financial Research, 3(12), pp. 133-141.
  11. Agegnew, A. (2019). The effect of working capital management on profitability: The case of selected manufacturing and merchandising companies in Hawassa city administration. Research Journal of Finance and Accounting, 10(1), pp. 1-22. https://doi.org/10.7176/RJFA
  12. Aldubhani, M. A., Wang, J., Gong, T. and Maudhah, R. A. (2022). Impact of working capital management on profitability: evidence from listed companies in Qatar. Journal of Money and Business, 2(1), pp. 70-81. https://doi.org/10.1108/jmb-08-2021-0032
  13. Cipta, W., Bagia, I. W. and Atidira, R. (2020). The influence of accounts receivable turnover, current ratio, credit growth on profit at savings and loans cooperatives in Buleleng District. In 5th International Conference on Tourism, Economics, Accounting, Management and Social Science (TEAMS 2020) (pp. 279-284). Atlantis Press. Amsterdam, Netherlands
  14. Dan, P. (2020). Account receivable management and corporate performances: An empirical evidence from quoted manufacturing companies in Nigeria. Inosr Arts and Management, 6(1), pp. 116-129.
  15. Dirie, A. O. and Ayuma, C. (2018). Effect of accounts receivables management on financial performance in small and medium firms in mogadishu, Somalia. International Journal of Management and Commerce Innovations, 6(1), pp. 378-383.
  16. Douglas, M., Wambugu, H. W. and Maina, M. (2018). The Effect of Working Capital Management on Performance of Small Enterprises in Kenya. International Journal of Managerial Studies and Research (IJMSR), 6(12), pp. 1–9.
  17. Duru, A. N., Ekwe, M. C. and Okpe, I. I. (2014). Accounts receivable management and corporate performance of companies in the food & beverage industry: evidence from Nigeria. European Journal of Accounting Auditing and Finance Research, 2(10), pp. 34-47.
  18. Duru, A. and Ubesie, M. C. (2016). Effect of management of receivables ration on corporate profitability of industrial or domestic products in Nigeria. European Journal of Accounting, Auditing and Finance Research, 4(11), pp. 84-97.
  19. Elsheikh, L. and Hassanin, I. (2019). The impact of inventory management on firms’ financial performance : case study Egypt. In International Conference on Management and Industrial Engineering (No. 9, pp. 612-618). Niculescu Publishing House. România
  20. Eneisik, G. E., Obara, L. C. and Uwikor, M. K. (2023). Effect of companies income tax on financial performance of listed manufacturing companies in Nigeria. Int J Econ Financ Manage, 8(2), pp. 25-49. https://doi.org/10.56201/ijefm.v8.no2.2023.pg25.49
  21. Hanifah, A. (2023). The effect of current ratio and receivable turnover on profitability (Study of PT X financial reports for the 2016-2021 period). Dinasti International Journal of Economics, Finance & Accounting, 4(4), pp. 577-591. https://doi.org/10.38035/dijefa.v4i4.2040
  22. Imran, A. K. (2018). The effect of accounts receivable management on corporate profitability: empirical evidence from India. International Journal of Research in Management, 08(2), pp. 76–83.
  23. Jindal, D., Jain, S. and Vartika, K. (2017). Effect of receivables management on profitability: A study of commercial vehicle industry in India. Management, 2(2), pp. 246-255.
  24. Keynes, J. M. (1936). The supply of gold. The Economic Journal, 46(183), pp. 412-418.
  25. Kristiana, D. and Karnasi, R. (2024). The effect of working capital management on profitability in manufacturing companies listed on the Indonesia Stock Exchange. Journal of Applied Business, Taxation and Economics Research, 3(3), pp. 232-239. https://doi.org/10.54408/jabter.v3i3.255
  26. Kuraesin, A. D., Santuri, O. and Mahyuni, R. Y. (2023). The effect of accounts receivable turnover on profitability in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2015–2020 Period (Issue Idx). Atlantis Press International BV. https://doi.org/10.2991/978-94-6463-068-8_9
  27. Lazarus, L. L., Kwame, A. A., Rakibu, Z. S., Prince, S. and Paul, M. (2023). Empirical study on the impact of account receivables and inventory conversion cycle on profitability of manufacturing firms listed on Ghana Stock Exchange. Open Journal of Business and Management, 11(3), pp. 1324-1339. https://doi.org/10.4236/ojbm.2023.113073
  28. Mazanec, J. (2022). The impact of working capital management on corporate performance in small–medium enterprises in the Visegrad Group. Mathematics, 10(6), p. 951. https://doi.org/10.3390/math10060951
  29. Mbarushimana, E. and Kengere, O. (2023). Accounts receivable management practices and financial performance of manufacturing companies in Rwanda; A Case Study of CIMERWA Plc. Journal of Finance and Accounting, 7(9), pp. 21–44.
  30. Mutai, A. K. and Kimani, E. M. (2019). Effect of accounts payable management practices on liquidity of public technical training institutions in Rift Valley Region, Kenya. International Academic Journal of Economics and Finance, 3(3), pp. 174-186.
  31. Muthoni, J. G., Naibei, K. I. and Livingstone, K. (2020). Management of accounts receivable and financial performance of manufacturing firms listed in Nairobi stock exchange, Kenya. International Journal of Scientific and Research Publications, 10(12), pp. 513-523. https://doi.org/10.29322/ijsrp.10.12.2020.p10858
  32. Mutiso, A. and Mwangi, P. (2019). The effect of receivable management on performance of small and medium scale manufacturing firms in Kiambu County, Kenya. International Journal of Economics, Commerce, and Management, 7(8), pp. 834-849.
  33. Nwakaego, D. A., Ikechukwu, O. I. and OnochieBenedict, A. (2015). Relationship between audit committee characteristics and financial reporting quality of quoted fast moving consumer goods companies in Nigeria, Enugu State, Nigeria
  34. Odondi, C. J., Nteere, K. K. and Njeru, A. (2015). Effect of receivable management on financial performance; a case study of Deloitte East Africa limited authors. International Journal of Science and Research, 6(10), pp. 2319–7064. https://doi.org/10.21275/ART20177444
  35. Oktavia, D. and Indrati, M. (2021). Effect of receivables, inventories, and payables on working capital. Journal Research of Social Science, Economics, and Management, 1(2), pp. 101-115. https://doi.org/10.36418/jrssem.v1i2.15
  36. Olatunji, T. E. and Adegbite, T. A. (2014). Investment in fixed assets and firm profitability: Empirical evidence from the Nigerian banking sector. Asian Journal of Social Sciences and Management Studies, 1(3), pp. 78-82.
  37. Owuor, G. O., Agusioma, N. and Wafula, F. (2021). Effect of accounts receivable management on financial performance of chartered public universities in Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 3(1), 73-83. https://doi.org/10.35942/ijcfa.v3i1.182
  38. Purwanti, T. (2019). An analysis of cash and receivables turnover effect towards company profitability. International Journal of Sociology, 1(1), 037-044. https://doi.org/10.29040/seocology.v1i01.6
  39. Sindani, M. N. L. (2018). Effects of accounts receivable financing practices on growth of SMEs in Kakamega County, Kenya. Expert Journal of Finance, 6, pp. 1-11.
  40. Soundarya, S., Vanitha, P. and Ramprathap, D. K. (2020). A study on the effect of receivables management on working capital of vks fabrics. International Journal of Creative Research Thoughts, 8(7), pp. 1350-1356.
  41. Ugwudioha, O. and Onmonya, L. (2022). Determinants of accounts receivable of listed consumer goods companies in Nigeria. Universal Journal of Accounting and Finance, 10(4), pp. 793-802. https://doi.org/10.13189/ujaf.2022.100401
  42. Wanguu, K. C. and Kipkirui, S. E. (2015). The effect of working capital management on profitability of cement manufacturing companies in Kenya. IOSR Journal of Economics and Finance, 6(6), pp. 53-61. https://doi.org/10.9790/5933-06635361
  43. Yusup, W. E. and Hariani, S. (2023). The effect of receivables turnover, inventory turnover and current ratio on profitability. Jurnal Riset Manajemen dan Bisnis, 8(1), pp. 23-32. https://doi.org/10.36407/jrmb.v8i1.987
CAPTCHA Image