The Influence of Capital Structure on the Financial Performance of Listed Industrial Goods Companies in Nigeria

Abstract

The study examined capital structure and its influence on the financial performance of selected listed goods in Nigeria between 2014 and 2023. Capital structure is used to determine how firms mix their equity and debt in financing its business operations to boost financial performance. The ex-post facto research design was employed for the study and the data used were extracted from the annual reports and accounts of three (3) purposively selected industrial goods firms in Nigeria in the NGX; Dangote Cement PLC, Lafarge Africa PLC and BUA Cement PLC. The panel data was utilized to analyze the data to determine the relationship between capital structure variables and financial performance.  The findings from the study showed that a higher equity ratio significantly improved financial performance; and a higher debt ratio equally impacted on the financial performance positively.  Conversely, the debt-to-equity ratio did not significantly affect the financial performance and was negative in the fixed effect model.  However, it was recommended that firms should optimize equity finance, manage debt level efficiently and re-evaluate debt-to-equity ratio policies to prevent its adverse effect on financial performance.