European Journal of Accounting, Finance and Investment

Capital Structure And Cost Of Capital Of Fast Moving Consumer Goods Multinational Companies In Nigeria

Uzochukwu-Obi, Chidiebube Peace

Nnamdi Azikiwe University

Dr. Oraka, Azubuike Onuora

Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra state, Nigeria

Keywords: Capital Structure, Cost of capital (WACC), Fast moving consumer goods multinational companies

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Abstract

This study explored the capital structure and cost of capital of fast moving consumer goods multinational companies in Nigeria. Specifically, the study examined the effect of the capital structure on cost of capital of the multinational companies. The study adopted a causal research design. The population of the study comprises all the six multinational fast moving consumer goods companies listed on the Nigerian stock exchange using purposive sampling). The researcher collected secondary data from the audited financial statements of the companies. Ordinary least square regression was used to test the hypotheses of the study at 5% level of significance. The findings revealed that total debt to total asset, long term debt to total assets and long term debt to shareholders’ equity do not have significant effect on cost of capital while total debt to capital employed does. It was recommended that a good balance of debt and equity with its inherent costs should be maintained in order to have an optimal capital structure.