Capital Structure and Firms Performance. A Study of Consumer Goods Firms Listed in Nigerian Stock Exchange

Abstract

This study was carried out to examine the relationship between corporate capital structure and financial performance of consumer goods companies listed on the Nigeria Stock Exchange. The population of the study was made up of all the consumer goods companies listed in the Nigeria Stock Exchange. The study, using the results of the financial statement statistics and exploratory variables in a regression model showed that equity financing ratio has positive but not significant relationship with return on assets, and that tangibility of assets has a significant positive relationship with return on assets.  The study also finds a negative relationship between long term debt financing and financial performance of listed consumer goods companies in Nigeria. The study therefore concludes that corporate capital structure influences the financial performance of listed consumer goods companies in Nigeria and recommends amongst others that companies should rely more on equity financing as it has shown that it improves on the profitability of the company.

Keywords: Capital Structure, Financial Performance, Debt financing, equity financing, tangibility of assets.

DOI: 10.7176/RJFA/12-12-02

Publication date:June 30^th 2021