LINEARITY ASSUMPTION AMONG PROFITABILTY, SALES AND CURRENT OPERATING ASSETS (A STUDY OF QUOTED FOOD AND BEVERAGES INDUSTRIES IN NIGERIAN STOCK EXCHANGE)

Abstract

This study examined the assumption that there is linearity between gross profit, turnover, inventory, sales outstanding and purchases outstanding. This relationship was examined using correlation and regression analysis. In this study, twelve (12) manufacturing companies quoted in the Nigerian Stock Exchange under Food and Beverages sector of the economy for a period of five(5) years from 2006-2010.Regression analysis using statistical packages for social science software (IBM SPSS Statistics Version20) was run to test four hypotheses. It was observed that out of the four hypotheses, two were rejected, that is H01, and H04 which showed that there is linear relationship between profitability and turnover purchases respectively