Inventory Management Practices and Sustainable Cash Flows of Small Scale Pharmaceutical Enterprises in Eket Urban, Akwa Ibom State, Nigeria

When a high volume of inventory is held in stock, a greater part of the companies’ fund is tied down and the company is likely going to face liquidity crises and lack of operating cash flows to sustain the company. The main objective of the study is to examine the effect of inventory management practices on sustainable cash flows of small-scale pharmaceutical enterprises in Eket Urban, Akwa Ibom State. The independent variable, inventory management practices was proxied by inventory holding period, inventory turnover, vendor managed inventory, economic order quantity and inventory intensity, while the dependent variable, was proxied by operating cash flows. The research design adopted for this study is survey design and primary data used were derived using the study self-constructed 5-point Likert questionnaire. The population of the study is 77 staff of the 20 pharmacies in Eket Urban. Judgmental sampling technique was adopted to select a sample of 66 staff consisting of the accountants, managers and store personnel of the pharmacies. The hypotheses of the study were tested using pool ordinary least square regression analysis and the statistical package employed was SPSS version 21. The result of the analysis revealed that inventory holding period {-0.414(0.001)} has a significant effect on operating cashflows; inventory turnover {0.347(0.005)} has a significant positive effect on operating cashflows; economic order quantity {0.377(0.038)} has a significant positive effect on operating cashflows; vendor managed inventory {-.116(0.094)} has a nonsignificant effect on operating cashflows; inventory intensity {.192(0.059)} has a nonsignificant positive effect on operating cashflows of small-scale pharmaceutical enterprises in Eket Urban, Akwa Ibom State Nigeria. The study was concluded that effective inventory management can enhance sustainable cashflows of small-scale pharmaceutical enterprises in Eket Urban, Akwa Ibom State Nigeria. Based on the findings of this study. it was recommended among others that management of pharmacies in Eket should adopt efficient inventory management strategies, such as just-in-time (JIT) systems, to reduce the inventory holding period and inventory intensity.