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Capital Structure and Financial Performance of Food and Beverages Firms in Nigeria

UGO, Chibuike Camillus, PhD, EKEH Chibuike Franklyn, PhD

Abstract

This study aimed to examined the effect of capital structure on the financial performance of food and beverages firms in Nigeria. The specific objectives of the study are to; examine the effect of debts financing on return on equity of food and beverages firm in Nigeria: examine the effect of equity financing on Return on equity of food and beverages firm in Nigeria. The researcher adopted the ex-post facto research design technique, the population size of the study was ten (10) firms in number The multiple linear regression model, correlation coefficient (R), R-Square, Adjusted R-Square, t-Statistic (t-Stat), Statistics and P-value are used to analyze the data collected. The finding of the study indicated; debt financing showed positive and insignificant effect on return on equity; equity financing indicated positive and significant effect on return on equity. The study recommended that Management should careful consideration and moderation in the utilization of debt financing, emphasizing the importance of maintaining a balanced capital structure to mitigate potential adverse impacts on net profit margins, thereby safeguarding overall financial health and profitability. Management should involve a thoughtful emphasis on equity financing as a potential driver for enhanced net profit margins, suggesting that businesses may benefit from considering an increased reliance on equity in their capital structure to foster a positive impact on profitability and ensure sustainable financial success.

Keywords

Capital Structure; Financial Performance; Debts Financing; Return on Equity; Equity Financing; Return on Equity

References

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