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Effect of Firm Leverage on Economic Sustainability of Nigerian Industrial Goods Firms

Ikilidih, Joy N and Okeke, Loveline Nwakaego

Abstract

This study ascertained the effect total debt to asset ratio on the operating cashflow margin of listed industrial goods firms in Nigeria. Ex Post Facto was adopted for the research design. Data were extracted from annual accounts of industrial goods firms in Nigeria from 2012 to 2024. Regression analysis was employed to test the hypothesis. The study found that total debt to asset ratio has a negative significant effect on operating cashflow margin of industrial goods firms in Nigeria. The statistically significant positive effects of certain leverage ratios imply that when firms align their capital structure strategically, debt can become a tool for boosting operational performance and maintaining long-term viability. Based on results, the study recommended that financial regulators needs to consider setting benchmark debt-to-asset ratios for the sector, as excess leverage weakens cashflow and threatens firms’ ability to sustain operations and meet long-term obligations.

Keywords

Total debt to asset ratioOperating cashflow margin and Industrial goods firms

References

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