TITLE:
The Impact of Capital Structure on Financial Performance of Consumer Goods Industry in Nigeria
AUTHORS:
Muhammad Usman
KEYWORDS:
Debt, Equity, Return on Asset, Return on Capital Employed
JOURNAL NAME:
Open Journal of Accounting,
Vol.8 No.4,
October
31,
2019
ABSTRACT: The study aims to examine the impact of capital structure on the financial performance of the consumer goods industry in Nigeria. The population of the study comprised of the consumer goods companies listed on the Nigerian Stock exchange with a Sample size of six (6) companies, using filter as a sampling technique of which a period of five (5) years was used from 2012-2016. The Dependent variable of the study is financial performance proxied by return on asset (ROA), while the independent variables of the study are: Long term debt (LTD), Short term debt (STD) and shareholders’ funds (ROE). The data generated from annual report and accounts of the selected companies were analyzed by means of descriptive statistics, correlation and regression analysis using E-views 8.0. The result of the analysis was tested at 0.05 (5%) level of significance. The findings of the study show that Short term debts have no significant impact on the financial performance of listed firms in the Nigeria consumer goods industry. It was also discovered that Long term debts have no significant impact on the financial performance of listed firms in the Nigeria consumer goods industry. It was also discovered that Equity has significant impact on the financial performance of listed firms in the Nigeria consumer goods industry. The study recommended that in making a decision on what the composition of their capital structure will be, companies should look critically and make comparison between the cost of obtaining a particular source of capital and the benefit that can be derived from it instead of making capital structure decisions on baseless generalizations. This will help managers ensure that there will be a gain at the end of the day.