Capital Structure and Financial Performance of Quoted Manufacturing Companies in Nigeria
Abstract
The study focused on capital structure and financial performance of quoted manufacturing companies in Nigeria. It employed ex-post facto research design and extracted data from annual reports of a cross section of manufacturing companies from 2016 to 2025. It employed capital structure variables such as total debt to total asset, total debt to total equity, short term debt to total asset and long-term debt to total assets while return on asset was adopted for financial performance. The study carried out unit root test to ascertain the stationarity of variables and all the variables were stationary. Panel data regression analysis was adopted to estimate the variables. The results substantiates that total debt to total asset ratio has both negative and insignificant impact on return on asset of quoted firms in Nigeria while total debt to total equity ratio, short -term debt to total assets ratio and long-term debt to total assets ratio have positive but insignificant impact on return on asset of quoted firms in Nigeria. Based on these findings, the study recommends that The Management of Nigerian quoted manufacturing firms should be concerned about the level of their total debt to total equity, for better financial performance. This is because the findings of this study revealed a positive and significant relationship between total debt to total equity and return on asset. Also, stakeholders of quoted Manufacturing firms in Nigeria should increase the level of total debt to total assets and long-term debt of any firm in order to improve financial performance.
Keywords
Total debt to total asset ratiostotal debt to total equity ratiosshort-term debt to total assets ratiolong-term debt to total assets ratiofinancial performance.
References
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