ANALYSIS OF THE EFFECT OF FIRM LIQUIDITY AND FIRM LEVERAGE ON FIRM VALUE OF NIGERIAN LISTED NATURAL RESOURCES COMPANIES

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This study examined the effects of firm liquidity and firm leverage on the Price-to-Book Ratio of Nigerian-listed natural resources companies. Specifically, the study investigated the effects of firm liquidity and firm leverage on the Price-to-Book Ratio, a proxy for firm value. The study adopted an ex post facto research design, using secondary data from the audited annual reports of four natural resources companies listed on the Nigerian Exchange Group: Aluminium Extrusion Industries Plc, Industrial & Medical Gases Nigeria Plc, Multiverse Mining and Exploration Plc, and Thomas Wyatt Nigeria Plc. A census sampling technique was employed, covering all four firms over fifteen years (2011 to 2025), resulting in 60 firm-year observations. Descriptive statistics, correlation analysis, unit root test, Johansen cointegration test, and panel least squares regression were used for data analysis at the 5% significance level. The unit root results showed that all variables were integrated of order one, while the Johansen cointegration test indicated the absence of a long-run equilibrium relationship among the variables. The regression results revealed that firm leverage had a positive and significant effect on the Price-to-Book Ratio (β = 1.5516, p < 0.05). Similarly, firm liquidity exerted a positive and significant effect on the Price-to-Book Ratio (β = 0.3161, p < 0.05). The study concluded that effective leverage and liquidity management significantly enhance the market value of Nigerian-listed natural resources companies. Consequently, the study recommends that management maintain an optimal debt-equity mix while strengthening liquidity management practices to improve investor confidence, operational efficiency, and long-term shareholder value.

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