Effect of Financial Leverage on Financially Sustainability in Nigerian Industrial Goods Firms
Onuegbu Ebere C. and Ezekwere Uzochukwu
Abstract
The study determined the extent financial leverage affected operating cashflow margin in Nigerian industrial goods firms, using total debt to equity ratio and long-term debt to asset ratio as the independent variables. Ex post facto was used as the research design. Data were extracted from the annual accounts of the sampled firms. Panel regression analysis was employed to test the hypotheses. The study shows that Total debt to equity ratio has negative significant effect on operating cashflow margin of listed industrial goods firms in Nigeria at 5% level of significance. Meanwhile, the study revealed that long-term debt to asset ratio has a positive significant effect on operating cashflow margin of listed industrial goods firms in Nigeria at 5% level of significance. Based on the results, this study recommended among others that Financial Advisers needs to assess the firm’s debt-to-equity ratio regular to prevent excessive gearing as well as recommend optimal capital structure verges.
Keywords
Total debt to equity ratio
Long-term debt to asset ratio and Operating cashflow
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Reporting of Listed Non-financial Firms in Nigeria. FUDMA Journal of Accounting and
Finance Research [FUJAFR], 1(2), 156-170.
Suardi, I., & Noor, K. D. (2015). The impact of capital structure on financial performance of the
listed agriculture companies in Indonesia. Global Journal of Business and Social Science
Review, 3(1), 9-17.
Nigeria. Nigerian Journal of Management Sciences, 25(1).
Adeyemi, A. Z., Lawal, N. A., & Olorede, T. E. (2024). Corporate Attributes and Sustainable
Growth: Evidence from Listed Conglomerate Companies in Nigeria. Business Excellence
& Management, 14(1).
Agu, S.I & Amedu J.M.A (2018). Relevance of Sustainability Disclosure to Profitability of
Listed Pharmaceutical Firms in Nigeria. Journal of Scientific & Engineering Research,
9(11), 11950-1201.
Aishwarya, P. (2022). A Study on Impact of Capital Structure on Profitability of Companies
Listed in Indian Stock Exchange with respect to Automobile Industry. arXiv preprint
arXiv:2207.00720.
Akmalia, A. (2023). Do Profitability and Capital Structure Influence Firm Value? The
Moderating Role of Dividend. SENTRALISASI, 12(1), 14-27.
Akpan, D. C., & Uwakmfonabasi, J. S. (2021). Corporate sustainability disclosures and cash
flow return on investment of shareholders of oil and gas companies in
Nigeria. International Journal of Innovative Finance and Economics Research, 9(3),
111-124.
Alaaraj, H. K., Mulla, G. S., John, J. A., & Abdalla, R. A. (2024). Impact of Current and
Leverage Ratio Towards the Financial Performance of Iraqi Listed Banks. In Sustainable
Innovations in Management in the Digital Transformation Era (pp. 262-272). Routledge.
Alade, M. E., & Odugbemi, O. M. (2022). Corporate characteristics and implementation of
integrated reporting framework of listed oil and gas firms in Nigeria. International review
of business and economics, 6(1), 23.
Alfisah, E., & Zulfikar, R. (2022). How Capital Structure And Financial Performance Impact On
Food And Beverage Company Value?. International Journal of Science, Technology &
Management, 3(1), 104-112.
Anozie, O. R., Muritala, T. A., Ininm, V. E., & Yisau, N. S. (2023). Impact of capital structure
on financial performance of oil and gas firms in Nigeria. Future Business Journal, 9(1),
1-9.
Bappah, S., Mohammed, A. U., Saleh, M. A., & Taiwo, O. O. (2024). Effect of capital structure
on financial performance of listed oil and gas firms in Nigeria. International Journal of
Humanities Social Science and Management (IJHSSM), 4(3), 999-1008.
Boshnak, H. (2023). The impact of capital structure on firm performance: evidence from Saudi-
listed firms. International Journal of Disclosure and Governance, 20(1), 15-26.
Elahi, M., Ahmad, H., Shamas, M., & Saleem, A. (2021). The impact of operating cash flows on
financial stability of commercial banks: Evidence from Pakistan. The Journal of Asian
Finance, Economics and Business, 8(11), 223-234.
Kajal, A., & Bansal, S. (2024). Analysing impact of corporate attributes on sustainability
disclosures through India’s new BRSR framework. International Journal of Law and
Management.
Meteke, S., Ehiedu, V. C., Ndah, F., & Onuorah, A. C. (2022). Banks’ gearing options and
operating performance in Nigeria: A Panel Approach. International Journal of Innovative
Finance and Economics Research, 10(4), 123-133.
Moronya, A. H. (2024). Influence Of Financial Leverage Alternatives On Performance Of
Microfinance Institutions In Kenya. A Moderating Role Of Firm Size (Doctoral
Journal of Accounting and Financial Management E-ISSN 2504-8856 P-ISSN 2695-2211
Vol 11. No. 10 2025 www.iiardjournals.org online version
IIARD – International Institute of Academic Research and Development
Page 64
dissertation, Kisii University).
Muhammed, A. A. (2023). The Role of Capital Structure on Profitability during Financial Crisis:
An Empirical Evidence of Financial-Firms listed in the Iraq Stock Exchange. Central
European Management Journal, 31(2), 658-667.
Nworie, G. O., & Aniefuna, T. J. (2024). Transcending the Traditional Profit-Centric Approach
to Socially Responsible Paradigm-Effect on Firm Profit of Listed Consumer Goods Firms
in Nigeria. International Journal of Social Sciences and Management Research, 10(1),
112-129.
Nworie, G. O., & Mba, C. J. (2022). Modelling financial performance of food and beverages
companies listed on Nigerian exchange group: the firm characteristics effect. Journal of
Global Accounting, 8(3), 37-52.
Oktrima, B., & Sutrisno, B. (2023). Effect of capital structure and profitability on company
values. International Journal of Educational Administration, Management, and
Leadership, 13-20.
Oranefo, P. C., & Egbunike, C. F. (2023). Gearing ratio and operating cash flow performance of
quoted manufacturing firms in Nigeria. International Journal of Financial, Accounting,
and Management, 4(4), 395-410.
Rahman, A. (2024). Assessing financial concert-constructed employ cash impact: Nepalese non-
life insurance companies. Asian Journal of Finance & Accounting, 5(1), 121-126.
Razaq, A. G., Alhassan, A., & Ame, J. (2023). Effect of Corporate Attributes on Sustainability
Reporting of Listed Non-financial Firms in Nigeria. FUDMA Journal of Accounting and
Finance Research [FUJAFR], 1(2), 156-170.
Suardi, I., & Noor, K. D. (2015). The impact of capital structure on financial performance of the
listed agriculture companies in Indonesia. Global Journal of Business and Social Science
Review, 3(1), 9-17.
