Operating Costs and Profitability of Listed Consumer Goods Firms in Nigeria
The paper examined the effect of operating costs on the return on asset of Nigerian consumer goods companies. Panel data regression analysis adopted over a ten-year period (2015-2024). It was found out that the Ordinary Least Squares (OLS) analysis results demonstrate that both Labour Cost (LC) and Overhead Cost (OC) positively impact performance results. The performance results of the study showed statistical significance because the p-values for both Labour Cost (LC) and Overhead Cost (OC) were 0.0355 and 0.0293 respectively. The research showed that material costs decrease ROA by 32% because businesses use their assets less efficiently during inflation and forex market instability periods. It was concluded that operating costs have significant effect on Return on Assets (ROA) of listed consumer goods firms in Nigeria. The paper suggested that firms should implement activity-based costing to track material expenses precisely. Digital tools enable management to allocate overhead costs through their rationalization process. Automation decreases indirect production expenses during its entire operational period.
Keywords: administrative cost, labour cost, material costs, operating cost, overhead cost, ROA
