COST EFFICIENCY AND FINANCIAL PERFORMANCE OF BREWERY FIRMS IN NIGERIA
Keywords:
Cost Efficiency, Profit for the Year, Operating Expenses Ratio, Administrative Cost Ratio, Production Cost per UnitAbstract
This study examined cost efficiency and financial performance of brewery firms in Nigeria for a period of ten years (2016–2025). Specifically, the study examined how operating expenses ratio, administrative cost ratio, and production cost per unit affect profit for the year as a proxy for financial performance. The study adopted an ex-post facto research design and employed a purposive sampling technique to select three brewery firms listed on the Nigerian Exchange Group. Secondary data were sourced from the audited annual reports of the selected firms and analyzed using descriptive statistics and panel least squares regression. The regression results revealed that operating expenses ratio (coef. = -0.1246; p = 0.0120 < 0.05) and administrative cost ratio (coef. = -0.0893; p = 0.0045 < 0.05) have negative and statistically significant effects on profit for the year, indicating that higher operational and administrative expenditures reduce profitability. Production cost per unit (coef. = -0.3769; p = 0.0490 < 0.05) also exhibited a negative and significant effect, suggesting that inefficient production processes erode profit margins. The model showed an Adjusted R-squared of 0.582, meaning that approximately 58% of the variations in profitability are explained by cost efficiency variables. The study concludes that effective management of operating, administrative, and production costs is critical for enhancing the financial performance of brewery firms in Nigeria. Firms that implement cost-control measures, optimize resource utilization, and adopt efficient production strategies are likely to achieve higher profitability and long-term sustainability.
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