ABSTRACT

This study was conducted to investigate the effect of financial leverage on financial performance of quoted pharmaceutical companies in Nigeria. The ex-post factor research design was used in measuring the relationship among the variables of the study. Data were collected from secondary source through the annual reports and accounts of six (6) sampled Quoted Pharmaceutical Companies out of a population of eleven quoted Pharmaceutical firms in Nigerian Stock Exchange that have complete financial records either on their website or in the office of the Nigerian Stock Exchange. Multiple regression was used to test the three hypotheses formulated by the study. The results of the descriptive statistics and regression were presented. Result on effect of debt ratio (DR) on Profitability of listed pharmaceutical companies revealed that debt ratio has negative and insignificant impact on the profitability of listed pharmaceutical companies in Nigeria. Result on effects of interest coverage ratio (ICR) on Profitability of listed pharmaceutical companies in Nigeria revealed that interest coverage ratio has no significant effect on Profitability of listed pharmaceutical companies in Nigeria. Finally result on effect of Debt- Equity Ratio (DER) on Profitability of listed pharmaceutical companies in Nigeria also revealed that total debt to total equity has positive significant impact on the performance of listed pharmaceutical companies in Nigeria. In conclusion, the study therefore recommends that managers should work very hard to optimize the capital structure of their firm in order to increase the financial performance. The capital structure of firms should be adequately planned to safeguard the interest of the equity holders, shareholders and financial requirements of the firm.