Publisher: Centre For Social Science Research Enugu

Analysis of The Relationship Between Debt Financing and Firm Profitability of Some Selected Quoted Firms In Nigeria

Ude, Alexander Onyebuchi, Ph.d, Cna
KEYWORDS: DEBT FINANCING, FIRM PROFITABILITY, QUOTED FIRMS

ABSTRACT:

 Analysis of the relationship between debt financing and firm profitability of some selected quoted firm. Between 2008 to 2012; was carried out with the following objectives (i) to determine the relationship between debt financing and firm profitability for Nigerian firms (ii) to determine the relationship between debt financing and Nigerian firm asset utilization. The following research questions were asked (a) what is the relationship between debt financing and firm profitability for Nigerian firms? (b) what is the relationship between debt-financing and Nigerian firm asset utilization? The following hypotheses were stated (i) the relationship between debt financing and profitability of Nigerian firms is not positive. (ii) There is no positive relationship between debt financing and assets utilisation of Nigerian firms. The researcher sampled thirty 930) quoted firms that did not include financial service sectors which are known as fund providers. The hypotheses was tested using Pearson Moment Correlation. Findings from the hypotheses shows that the relationship between total debt ratio and net profit margin of Nigerian firms is positive. The relationship between total debt ratio and total asset turnover of Nigerian firms is not positive. The implications of the findings, is that management needs to pay serious attention to the composition of the firms financial structure. This is because the failure to achieve an optimal financial structure may lead to influence and financial distress which may result to bankruptcy. The conclusion is that the researcher identified firms value parameters and used them to determine the firms performance with the use of debt in financing the firms operations. The recommendation is that the firm management should ensure that there is properly financed in a way that it will enhance full utilization of the firms assets. The conclusion is that. 



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