Impact of Financial Leverage on Performance of QUoted Cement Manufacturing Companies in Nigeria
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Date
2016
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Faculty of Management Sciences, University of Ilorin
Abstract
In a corporate environment the major challenge to the finance manager lis how to maximize the owners' wealth on the long-run. With the view to achieve this objective of the organization, finance manager have to pay due attention on the proportion of debt and equity combination in capital structure of the organization. The main objective' of this study is to investigate impact of financial leverage on financial performance of quoted cement manufacturing .companies in Nigeria. Specifically, the study focuses on the relationship between debt-equity ratio and performance of firms. The study employed secondary data sourced from the annual financial statements of the selected companies. The data collected were subjected to linear regression and correlation analysis. The results revealed that there was, 10 significant impact of financial leverage on financial performance and a' positive relationship between debt-equity ratio and financial performance. Based on the findings, of this study, the study recommends optimal used of debt/equity, following the principle of traditional capital structure theory. The study concludes therefore that if optimum mix of debt/equity is achieved, it will1 enhance the financial performance of the cement manufacturing companies in Nigeria.
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Keywords
Financial Leverage, Financial Performance, Optimum Capital Structure, Quoted Cement companies in Nigeria