EFFECT OF FINANCIAL LEVERAGE ON ORGANIZATIONAL PERFORMANCE: A CASE STUDY OF NIGERIAN BOTTLING COMPANY PLC
Ogbolu, Isioma Anthonia, Kabiru Jinjiri Ringim and Halima Shuibu
Volume 8 Issue 2
Abstract
This study examined the Impact of Financial Leverage on Performance of Manufacturing Firms with particular reference to Brewery industries in Nigeria. Finance or money suppliers exert different controls over those firms they are providing funds for Guided by three research objectives, questions and hypothesis while secondary data was collection through published annual reports of the sample firms for the period of 2009- 2018. Descriptive statistic which explains the characteristics of research variables was utilized in the analysis with mean, median, standard deviation and other frequency distribution including maximum and minimum values of the time series data. Multiple regression analysis was used for the analysis because there are more than one independent variables affecting the dependent variables of the study. T-Test to measure the individual significance of the estimated independent variables, and F-Test to measure the overall significance. It was discovered that (1) debt- equity ratio has significant effect on return on investment (2) Capital employed also has significant effect on the return on investment and (3) Total debt significantly influenced the return on investment of Nigeria bottling Plc. The study recommends that Brewery firms in Nigeria should employ more of debt than equity to enhance returns to the shareholders. They should explore other forms of financing such as trade credit, trade discounts, and avoid prompt payment of short-term liabilities. This will make funds available for the day-to-day running of the business. Lastly Brewery firms in Nigeria should employ more of long-term capital in financing activities for enhanced earnings. Keywords: Financial Leverage, Profitability, Financial Performance, Organization
Download Paper