IMPACT OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF QUOTED MANUFACTURING FIRMS IN NIGERIA (A STUDY OF GUINESS NIGERIA PLC)

The financial performance of an entity is crucial not only for maximizing its value but for its survival. Existing empirical and theoretical evidence suggested that the capital structure choice is one of the major among other factors that influence firm's financial performance.Thus, the purpose of the this study is to examine the impact of capital structure on financial performance of a quoted manufacturing firm in Nigeria under the consumer goods sector of the economy. A secondary data was used for the study which covers a period of five years (5)between 2017- 2021. A descriptive research design was adopted for the study and the population consisted of 21 manufacturing firms of which one (1) was selected as a sampling size which was derived by using a purposive sampling technique.The study employed the use of total debt as a proxy to measure capital structureand profitability ratios; Return on Assets (ROA), Return on equity (ROE) and return on capital employed (ROCE) as a proxy to measure financial performance. Data were analyzed using regression and correlation analysis with use of SPSS. The regression results revealed an insignificant positive impact of ROA and ROE on capital structure proxy by Total debt which invariably concludes that total debt of the firm is not major determinant of ROA and ROE. Furthermore, the result also reflects an insignificant negative impact of return on ofreturn on capital employed ROCE on capital structure. Based on this funding it shows that there is no association between return on capital employed and total debt of the firm, that is, capital structure does not have any impact on the return on capital employed of the sampled firm. The study recommends that firm should keep debt under control and encourage investors to increase the equity capital because that helps to enhance financial performance.