Get the complete project »
- The Complete Research Material is averagely 55 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
- Full Access Fee: ₦4,000
There exists divergence of opinion in literature on the relationship between capital structure and firms financial performance. This mix of opinions makes the direction of the relationship between debt holders and equity holders to be controversial. Therefore, this study investigated the impact of capital structure on financial performance of listed manufacturing firms in Nigeria. The study formulated four hypotheses and used generalized least square multiple regression to analyze the secondary data extracted from the annual reports and accounts of the 31 sampled firms for the period 2009 to 2014. The study found that total debt, long-term debt and short-term debt have significant impact on the financial performance of listed manufacturing firms in Nigeria. The study also found that total debt to total equity has no significant effect on the financial performance of the firms. In view of the findings, it is recommended among others that the management of listed manufacturing firms should work very hard to increase the short term debt to total assets component of their capital structure, since it has positive impact on their financial performance. Also, the firms should reduce the level of total debt to total assets and long term debt to total assets in their capital structure components, because they affect their financial performance negatively.
Background to the Study
The nature and extent of relationship between capital structure and financial performance of firms have attracted attention in the literature of finance. Capital structure involves the decision about the combination of the various sources of funds a firm uses to finance its operations and capital investments. These sources include the use of long-term debt finance called debt financing, as well as preferred stock and common stock also called equity financing. One of the most important goals of financial managers is to maximize shareholders wealth through determination of the best combination of financial resources for a company and maximization of the company‟s value by determining where to invest their resources.
Capital structure represents the major claims to a corporation‟s asset. This includes the different types of equities and liabilities (Riahi-Belkaoui, 1999). The debt-equity mix can take any of the following forms: 100% equity: 0% debt, 0% equity: 100% debt; and X% equity: Y% debt. From these three alternatives, the first option is that of the unlevered firm, that is, the firm shuns the advantage of leverage (if any). Option two is that of a firm that has no equity capital. This option may not actually be realistic or possible in the real life economic situation, because no provider of funds will invest money in a firm without equity capital. This partially explains the term “trading on equity”, that is, the equity element that is present in the firm‟s capital structure that encourages the debt providers to give their scarce resources to the business. The third Option is the most realistic one in that, it combined both a certain percentage of debt and equity in the capital structure and thus, the advantages of leverage (if any) is exploited. This mix of debt and equity has long been a subject of debate in finance literature concerning its determination, evaluation and accounting.
Financial performance is the measure of how well a firm can use its assets from its primary business to generate revenues. Erasmus (2008) noted that financial performance measures like profitability and liquidity among others provide a valuable tool to stake holders which aids in evaluating the past financial performance and current position of a firm. Financial performance evaluation are designed to provide answers to a broad range of important questions, some of which include whether the company has enough cash to meet all its obligations, is it generating sufficient volume of sales to justify recent investment. Capital structure is closely linked with financial performance (Tian and Zeitun, 2007). Financial performance can be measured by variables which involve productivity, profitability, growth or, even, customers‟ satisfaction. These measures are related among each other. Financial measurement is one of the tools which indicate the financial strengths, weaknesses, opportunities and threats. Those measurements are return on investment (ROI), residual income (RI), earning per share (EPS), dividend yield, return on assets (ROA),, growth in sales, return on equity (ROE),e.t.c (Stanford, 2009).
You either get what you want or your money back. T&C Apply
You can find more project topics easily, just search
SIMILAR ACCOUNTING FINAL YEAR PROJECT RESEARCH TOPICS
» CHAPTER ONE 1.0 INTRODUCTION Forms of banking have been in existence about 500 BC. The early bankers (the jews) lombandy in Italy transacted their bus...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 Background of the study The construction industry plays an important role in the development of the economy of the countr...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.0 Introduction Data Mining (DM) really gained a lot of prominence in the society as it helped make prediction methodologies...Continue Reading »
4. THE IMPACT OF CAPITAL MARKET ON ECONOMIC DEVELOPMENT OF AKWA IBOM STATE (A STUDY OF NIGERIA STOCK EXCHANGE, UYO)» TABLE OF CONTENTS Cover Page Title Page Certification Dedication Acknowledgment Abstract Table of Content Chapter One: Introduction 1.1 Background of ...Continue Reading »
» ABSTRACT This research is on basic production control problems in automobile industries and best way of solving them with reference to Peugeot Automob...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY The current global economic meltdown which started in late 2007 was as a result of a liquidity sh...Continue Reading »
7. THE USE OF “UTAZI” LEAF EXTRACT (GONGRONEMA LATIFOLIUM) AS A MEANS OF EXTENDING THE SHELF LIFE OF A LOCALLY BREWED SORGHUM BEER.» ABSTRACT Sorghum beer is an indigenous African alcoholic beverage that has been long traditionally brewed in the Savannah region of Nigeria; over the ...Continue Reading »
» ABSTRACT Over the years, there have being a problem of incorrect and unreliable financial record which has lead to loss of organizational integrity. T...Continue Reading »
9. MANAGEMENT ACCOUNTING TECHNIQUES: A TOOL FOR DECISION MAKING IN AN ORGANIZATION (A CASE STUDY OF PLASTIC FOOTWEAR INDUSTRY LIMITED, PORT HARCOURT)» CHAPTER ONE INTRODUCTION 1.1 Background of the Study Management accounting techniques for decision making in manufacturing organization is seen as a c...Continue Reading »
» ABSTRACT This study examines the impact of Capital Market performance on economic growth of Nigeria for the period 1983 – 2010. Economic growth ...Continue Reading »