CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF CONSUMER GOODS INDUSTRY IN NIGERIA

ABSTRACT

The financial performance of consumer products companies listed in Nigeria was investigated in this study in relation to capital structure. With regard to consumer goods companies listed in Nigeria, the specific goal was to evaluate the impact of short-term, long-term, and total debt to equity on return on asset. 21 Nigerian consumer products companies that are listed on stock exchanges made up the study's population, which used an ex-post facto research approach. From 2012 to 2022, a purposive sample of sixteen companies from the Nigerian Exchange Group's (NGX) consumer goods division were included. The firms in the sample provided annual reports from which the data were gathered. Because of the makeup of the dataset, Panel Ols regression analysis was used to analyse the data. To sum up, the study concludes that a high leverage ratio is a sign of a mismatch between short-term obligations and the firm's inability to generate enough cash flows. The study suggests that the finance department of consumer goods firms, in particular the Chief Financial Officer (CFO) and financial managers, prioritise the prudent management of short-term debt levels by keeping a close eye on short-term borrowing activities, looking into alternative financing sources that have lower interest rates, and putting in place efficient working capital management practices to lessen the bank loan burden.