Determinants of Value Chain Accounting and Margin Ratios in listed Consumer Conglomerate Companies in Nigeria

Abstract

This study investigates the determinants of value chain accounting and margin ratios in consumer conglomerate companies listed on the Nigeria Exchange Group (NGX). Utilizing an ex-post facto research design, panel data were extracted from the audited financial statements of 11 purposively selected firms spanning 2015 to 2024. The actual cost of quality was adopted as a proxy for value chain accounting, while revenue, gross margin ratio, net margin ratio, and expenditure ratio were employed as explanatory variables. The regression analysis revealed a statistically significant positive relationship between revenue and the cost of quality, suggesting that enhanced product quality correlates with increased revenue generation. Conversely, gross margin and net margin ratios were negatively and significantly associated with the cost of quality, indicating a potential erosion of profitability due to quality-related expenditures. The relationship between expenditure ratio and cost of quality was positive but statistically insignificant. These findings underscore the dual role of quality investments in driving revenue while potentially reducing margin efficiency. The study recommends the adoption of Total Quality Management (TQM), Activity-Based Costing (ABC), lean accounting, and performance-based budgeting as strategic tools for aligning quality initiatives with financial performance in the consumer goods sector.