The Journal of Accounting and Management, Vol 10, No 1 (2020)

Abstract

The study analyzed the effect of tax and provision for depreciation on financial performance of selected quoted consumer goods captured by reserve in Nigeria (2008-2017). The study concentrated on five (5) randomly selected quoted consumer goods such as Flour Mills Nig. Plc, Dangote Cement Plc, Nestle Nig. Plc, Unilever Nig Plc, and PZ Cusson operating within Nigeria based on the availability and consistency of required data. The secondary data were sourced from the Published Annual Reports of selected quoted consumer goods, the study utilized panel least square analytical technique. The result of the findings showed that tax (TAX), provision for depreciation (PFD) and profit before tax (PBT) positively influenced the financial performance of FLRM and NEST by 31811588 and 6310438 respectively. Also, it was discovered that tax (TAX), provision for depreciation (PFD) and profit before tax (PBT) in the period under consideration hindered the financial performance of DANG, UNIL and NEST by 18482966, 16389816 and 2461191 respectively in Nigeria. The Adjusted R-squared of 0.23, 0.90 and 0.17 for pooled, fixed and random effect model showed that 23, 90 and 17 percent variation in the financial performance of the quoted consumer goods in Nigeria can be explained by tax and profit before tax of the quoted consumer goods under consideration. The study concluded that, quoted consumer goods in Nigeria increase their reserve as the tax, provision for depreciation and profit before tax increases. This implies that an increase in taxes and provision for depreciation of the quoted consumer goods brings about significant improvement in the financial performance. Therefore, since tax, provision for depreciation and profit before tax enhanced the performance of the quoted consumer goods, they should adopt policies that will increase their profit level so as to enhance and improve better financial performance through increment in reserve.