FINANCIAL LEVERAGE AND FINANCIAL PERFORMANCE OF SOME SELECTED MANUFACTURING COMPANIES IN NIGERIA

This study determined the nexus between financial leverage and Financial Performance of some Selected Manufacturing Firms in Nigeria (2013–2022). Specifically, it determined the extent of relationship between Debt-to-Equity, Total Debt ratio, Long term ratio and Return on assets of manufacturing companies in Nigeria. An ex-post facto research design approach was adopted for the study. Using a series data for the period of ten (10) years 2013 to 2022. Eight selected listed manufacturing companies were purposively chosen based on the firms’ position as the largest companies in manufacturing sector and its asset base and liquidity position. Secondary data were obtained from the financial statements of the companies from 2013 to 2022 financial year. Three hypotheses were formulated and tested in the course of this study. Regression analysis by aid of E-view v 10.00 was used to test for statistical significance of the relationship between financial leverage and Financial Performance. The results showed that there is significant positive relationship between Debt-to-Equity and Return on assets of manufacturing companies in Nigeria. This study further revealed that there is significant positive relationship between Total Debt ratio and Return on assets of manufacturing companies in Nigeria. Finally, the result also established that there is insignificant positive relationship between Long term ratio and Return on assets of manufacturing companies in Nigeria. Based on the findings, this study recommended among others that the appropriate capital mix should be tailored towards long term debt capital for maximum return of shareholders’ wealth and value of the company.