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The impact of efficient inventory management on profitability: evidence from selected manufacturing firms in Ghana.

Prempeh, Kwadwo Boateng (2015): The impact of efficient inventory management on profitability: evidence from selected manufacturing firms in Ghana.

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Abstract

Given the important contributions of the manufacturing sector to the Ghanaian economy, this research deems it necessary to evaluate the impact of efficient inventory management on the profitability of manufacturing firms in Ghana. A cross sectional data from 2004 to 2014 was gathered for the analysis from the annual reports of four manufacturing firms listed on the Ghana Stock Exchange. Measures of profitability were examined and related to proxies for efficient inventory management by manufacturers. The Ordinary Least Squares (OLS) stated in the form of a multiple regression model was applied in the analysis. The study revealed that the main variable raw materials inventory management designed to capture the effect of efficient management of raw material inventory by a company on it’s profitability is significantly strong and positive and impacts on the profitability of the manufacturing firms in Ghana. Therefore, efficient management of raw material inventory is a major factor to be considered by Ghanaian manufacturers in enhancing or boosting their profitability.

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