European Journal of Accounting, Finance and Investment

Firm Capital Mix And Profitability Based Performance Of Listed Manufacturing Firms In Nigeria: A Panel Data Approach

Nangih, Efeeloo (Ph.D)

Department of Accountancy, Kenule Beeson Sarowiwa Polytechnic, Bori

Effe-Nnamdi, Ann C.,

Department of Finance and Banking, Abia State University, Uturu

Atuonwu, Obiageri Eunice

Federal Polytechnic, Nekede Owerri

Turakpe, Morrison J. (Ph.D)

Department of Banking and Finance, Kensarowiwa Polytechnic, Bori

Keywords: Capital mix, Profitability, Return on Assets, Firm Size

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Abstract

This study investigated the effect of firm capital mix on profitability of listed manufacturing firms in Nigeria. The study was anchored on the pecking order theory. Data were sourced from annual financial reports of selected listed firms for the period of 2013 to 2021. Purposive sampling technique was employed to select 18 listed manufacturing firms; which formed the sample size for the study. The data were analyzed using descriptive, correlation and panel regression analysis techniques. The empirical results, showed that: total debt-to-asset ratio and short term debt assets had negative effects on return on assets. However, the result of total debt to total asset was insignificant while that of short term debt to asset was significant. Furthermore, while long term debt to assets and firm size have positive and significant relationship with return, total equity to total asset had positive but insignificant effect on return asset. Based on those findings, the study recommended that: management of manufacturing firms should opt more for long term debt rather than short term debt, but ensure that they do not over rely on debt capital as increasing levels of debt acquisition could manly affect certain performance. Also, it was recommended that they should seek for more cost effective operational strategies, in order to enhance their financial performance.