THE IMPACT OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF SELECTED CONSUMER GOODS COMPANY IN NIGERIA

The study examines impact of capital structure on the financial performance of selected consumers goods company in Nigeria. Basically, the study investigated the impact of equity financing, debt financing and debt-to-equity ratio on the financial performance of 15 selected companies namely Union dicon, Nigerian enamelware, Nascon Nig, Dangote flour, Dangote suger, MD & C General, Flour mills Nig, Golden guinea, PZ cousons, Honeywell Flour, International breweries, McNichols, Crown flour, Nig Flour mills and Nascon Allied. The data used in the study were obtained from the annual financial statement of selected companies within the sampled period. The descriptive statistic was used to explain the financial ratios in the study The study revealed that; selected companies utilized more of debt securities in financing assets to expand operations and bolster profitability; equity ratio had negative impact on financial performance of selected companies; capital structure sub-variables had mild impact on financial performance of selected firms within the sampled period. The study concluded that financial leverage (debt financing) positively impacts financial performance of companies in the manufacturing industry. The study further recommended that; it is important for government to pursue genuine policy measures targeted at revitalizing the market to ensure high volume of corporate debt issue, liquidity of market and market efficiency; There is need to ensure value maximization of shareholders’ funds; financial managers should ensure optimal employment of debt and equity finance; There is need for change in the attitude of banks towards quoted firms so that they can provide easier access to long-term debt financing.