Effect of Changes in Economic Variables on the Performance of Manufacturing Firms in Nigeria

The study examines the effect of changes in economic variables on the performance of manufacturing firms in Nigeria with two research objectives that were used to formulate the two hypotheses used. The study used data gathered from selected manufacturing firms and from the Central Bank of Nigeria statistical bulletins from 2004 to 2022. The variables used as proxy variables to measure changes in the economy are the average consumer price index and average exchange rate and the proxy variable for performance was earnings per share (EPS). Based on the results obtained, it was discovered that a significant relationship exists between the average consumer price index and earnings per share, but the average exchange rate showed no significant relationship between the independent variable and dependent variable. Based on the findings, it was concluded that the relationship between the average consumer price index and EPS occurs as a result of price adjustment by manufacturers to cushion the effect of price increases in the cost of production, thereby increasing their profit margins. The insignificant effect of the average exchange rate on EPS is in line with the economic reality of Nigeria, but manufacturers shift the burden of the exchange rate to the end users in the form of price adjustment. It was recommended that for Nigeria's economy to experience the desired level of prosperity, the government must be deliberate in its decision by ensuring that local firms are encouraged by patronizing their products to reduce the level of import-dependent on foreign products.