Inventory Management and Financial Performance of Listed Consumer and Industrial Goods Companies in Ghana and Kenya: Mediating Role of Liquidity

Abstract

This study compares inventory management and financial performance among listed consumer and industrial goods companies in Ghana and Kenya. The study collects secondary data from fourteen consumer and industrial goods companies in Ghana and twenty-five in Kenya from 2010 to 2025.

The study employs panel data regression techniques, specifically a structural equation model, to estimate relationships among the variables.  The findings show a positive association between inventory management and liquidity, suggesting that better inventory management is associated with stronger liquidity among consumer and industrial goods companies. The findings also show a significant positive association between liquidity and financial performance. The study finds a significant and negative association between inventory management and financial performance among listed Ghanaian consumer and industrial goods companies. The study establishes that liquidity, as a mediating variable, significantly influences the relationship between inventory management and financial performance.

The study explains how inventory management indirectly affects performance through liquidity. In making strategic plans for inventory levels, inventory-holding companies are required to adopt strategies that give them optimal inventory levels. This study's findings can inform an entity’s inventory management decision-making process.

This study examines liquidity's mediating role in the relationship between inventory management and financial performance. It also compares the relationship between inventory management and financial performance among listed consumer and industrial goods companies in Ghana and Kenya.