IMPACT OF CASH CONVERSION CYCLE ON FIRM PROFITABILITY OF THE HEALTH SECTOR IN NIGERIA

This study finds out the relationship between cash conversion cyde and firm profitability of listed health sector conpanies in Nigeria for five (5) years ranging from 2009 to 2014 with data obtained from the annual reports cf selected companies. Purposeful random sampling technique is used to select three (3) companies out cf eleven (11) health sector companies listed on doe Nigerian Stock Exchange as at 2015. The objectives of the study are to examine the ffect cf the operating cyde and liquidity on firm prcfitability. Multiple regression analysis is used to relate the variables. Finding show that there is no significant relationship between cash conversion cyde (operating cyde and liquidity) and firm prcfitability (net profit, return on assets and returns on equity). Finding also show that increase in operating cyde will decrease prcfitability, while increase in liquidity mil increase prcfitability (ROA and ROE) cfthe sdected companies. This study lecommends that health sector companies should determine their creditors3 payment period and credit purdoase term before deciding on their debtors' collection period and credit sales term to improve prcfitability, days cf receivables sloould be reduced and debtors should be granted discount term that mil attract early collection, tloe effect cf such credit sales term on the current year profit should be analyzed before adopted and firm should continue to increase current assets until it reaches a favorable ratio ie 2:1 which is considered best in financial statement analysis. This will irrprove the prcfitability of thefirm.