Effect Of Capital Structure On Profitability Of Selected Business Organizations In Nigeria :- Anyigoeze, Chinyere C

ABSTRACT

This project work examined the effect of capital structure on the profitability of selected business organizations in Nigeria. Ex-post facto research design was adopted while simple regression was employed to analyze the data collected. The result revealed that debt financing has a positive significant effect on net profit margin of selected firms. Also debt/equity ratio has a negative but insignificant effect on net profit margin of selected firms. The findings equally revealed that both short and long term debt ratios have negative but insignificant effect on net profit margin of selected firms. Based on the findings, it is recommended that management of quoted manufacturing firms should increase their commitment to short term debt to total assets ratio in order to improve the financial performance from their business operation. Management and shareholders should reduce the level of total debt to total assets and long term debt to total assets ratios in order to change the direction of association between these two ratios and financial performance of their firms.