ABSTRACT

The manufacturing sector plays a catalytic role in a modern economy and has many dynamic benefits that are crucial for economic transformation. In a typical advanced country, the manufacturing sector is a leading sector in many respects. It is an avenue for increasing productivity related to import replacement and export expansion, creating foreign exchange earning capacity; and raising employment and per capita income which causes consumption patterns to increase. Using data from the CBN Statistical Bulletin 2015, an analysis of the contribution of manufacturing sector to the growth of the economy is thus presented. The contribution of manufacturing sector to total output (GDP) was 13% in 1982. A slight decline of 12% was recorded in 1984 and further declined by 3% in 1986. An increase to 15% was recorded in 1988 and huge increase of 33% was obtained in 1990. From 1991, it decreased by 3% in 1992 and by 1994 a further decrease of2% was recorded. A huge increase of46% was obtained in 1996. However, it declined by 12% in 1998. From 2000, the contributions ofthis manufacturing sector only increased by 3% and further increased to 8% in 2002. Further fluctuations have therefore been recorded as seen from an increase to 11% in 2004 and also increased by 9% in 20j)6. By 2010 an increase of 7% was recorded and further increased to 14% in 2015. The main objective ofthis study is to examine the effect of debt financing on the financial performance of listed manufacturing firms in Nigeria. The specific objectives are: to examine the effect of interest on loan and advances on the PAT on the listed manufacturing firms in Nigeria, to determine the effect of interest on loan and advances on the ROA on the listed manufacturing firms in Nigeria and to investigate the effect of interest on loan and advances on the ROCE on the listed manufacturing firms in Nigeria. In conclusion of the study, tax paid and borrowings are significant variables in explaining changes in financial performance of manufacturing firms. While higher tax paid reduced the financial performance of firms, increased access to borrowings improved the financial performance ofmanufacturing firms.