Capital Structure and Financial Performance of Listed Manufacturing Firms in Nigeria (INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT)

Summary

• The study uses panel data from 26 selected listed manufacturing companies out of 52 listed on the Nigeria Exchange Group.p.1
• Annual reports of the selected companies from 2014 to 2023 provide the data.p.1
• The Wald statistic of 236.24 shows that all capital structure variables have a joint significant effect on the Asset Turnover ratio.p.1
• Debt-Equity Ratio, Debt Asset Ratio, Capital Gearing Ratio, Interest Coverage and Firm Size individually have insignificant influence on Asset Turnover.p.1
• For EBITDA, the Wald statistic is 103.11 with probability 0.000.p.9
• The study recommends that listed manufacturers adopt an optimal combination of capital structures to improve the quality of asset turnover.p.10

Key insights

1. The study adopted an ex-post facto design and examines the effect of capital structure on financial performance of listed manufacturing firms in Nigeria.p.1
2. Asset Turnover is not individually explained by debt-equity ratio (t = 0.49, pv = 0.621) or debt asset ratio (t = -1.08, pv = 0.278).p.1
3. The population comprised all 52 manufacturing companies listed on the Nigeria Exchange Group, of which 26 were sampled.p.7
4. The random effect model for asset turnover reports an adjusted R2 of 0.5403.p.8
5. In the EBITDA model, the debt asset ratio has a t-test of 4.48 with probability 0.000.p.9
6. The authors state that previous studies had not used asset turnover and EBITDA as measures of financial performance, which is the gap the study fills.p.7
7. The study concludes that capital structure components positively influence asset turnover and EBITDA.p.10