Financial Leverage and Financial Performance of Listed Manufacturing Firms in Nigeria

The study focused on financial leverage and financial performance of listed manufacturing firms in Nigeria. Financial leverage was measured using debt to equity ratio & coverage ratio. However, financial performance was measured using return on asset, return on equity and earnings per share. To achieve the objectives of the study, ex-post facto research design was adopted. The source of data collection is secondary data. Data were generated from annual reports and accounts of the selected manufacturing firms. The data collected were analyzed using multiple regression analysis. The first findings revealed that financial leverage (Debt to equity ratio & coverage ratio) has a significant effect on return on asset of listed manufacturing firms in Nigeria. The second findings revealed that financial leverage (Debt to equity ratio & coverage ratio) has no significant effect on return on equity of listed manufacturing firms in Nigeria. the third findings revealed that financial leverage (Debt to equity ratio & coverage ratio) has a significant effect on earnings per share of listed manufacturing firms in Nigeria. The study recommends that the amount of debt finance in the financial mix of the firm should be at the optimal level so as to ensure adequate utilisation of the firms’ assets.

Financial leverage, debt to equity ratio, coverage ratio, financial performance, return on asset, return on equity, earnings per share.

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