Capital Structure and Financial Performance of Listed Manufacturing Companies in Rivers State, Nigeria

JONAH Ngbomowa Moses PhD; ELLAH Bridget Agbonma; AARON Clinton Chika

doi:10.56201/jafm.vol.11.no8.2025.pg247.258

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Capital Structure and Financial Performance of Listed Manufacturing Companies in Rivers State, Nigeria

JONAH Ngbomowa Moses PhD, ELLAH Bridget Agbonma, AARON Clinton Chika

Abstract

This study explores the impact of capital structure on the financial performance of listed manufacturing companies in Rivers State, Nigeria. It specifically analyzes how the two primary components of capital structure equity financing and debt financing affect key financial performance indicators, namely net profit margin and earnings per share. The research was driven by the need to better understand how financing choices influence profitability and shareholder value within Nigeria’s challenging economic landscape. A descriptive and explanatory research design was employed, utilizing secondary data sourced from the audited annual financial statements of selected manufacturing firms listed on the Nigerian Exchange Group, covering the period from 2018 to 2022. Data analysis was conducted using descriptive statistics, Pearson correlation, and multiple regression analysis. The results show that equity financing has a positive and statistically significant influence on both net profit margin and earnings per share, implying that increased reliance on equity enhances financial performance. In contrast, debt financing exhibits a negative and statistically significant effect on the same indicators, suggesting that high levels of debt can undermine profitability and shareholder returns. The regression models accounted for 47.2% of the variance in net profit margin and 53.1% in earnings per share. The study concludes that capital structure decisions play a crucial role in shaping financial performance. It recommends that manufacturing firms prioritize equity-based financing while exercising caution in the use of debt. Financial managers are advised to tailor capital structure decisions to the unique characteristics of their firms and the broader macroeconomic conditions in Nigeria

Keywords

Capital StructureEquity FinancingDebt FinancingNet Profit MarginEarnings Per

References

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Capital Structure and Financial Performance of Listed Manufacturing Companies in Rivers State, Nigeria

Abstract

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