ABSTRACT

Every corporate entity needs finance to operate effectively. It is the sole-- responsibility of a financial manager to determine ways in which the firm obtains and manages these finance. A capital structure is the specific mix of fund a firm uses to finance its operations; it is the sole responsibility of the financial manager to select the best. The financial manager has two concerns in this area; firstly, how much should the firm borrow? That is, what mixture of debt and equity is best? The mixture chosen will affect both the risk and the value of the firm. Secondly, what are the last expensive sources of funds for tire firm? Some firms opt for external funding in form of loan capital otherwise known as dept finance. They do so by borrowing money on a long-term basis by issuing loan stocks (debenture) and exploring other sources but tire very effect of this kind of fund on the performance of the firm remains a controversy-there have been several studies in developing and developed countries generating mixed results, hence it was necessary to study the effect of long-term debt finance on corporate performance in Nigeria. For the purpose of this research, Nu-Lyne International LTD was chosen as a case study. Financial report of the firm for a period of five years were studied to analyze the relationship between long-term debt finance and corporate performance and also to compare the effects of the major components of the capital structure (equity and long-term debt) on corporate performance. The study revealed that long-term ccbt finance a positive effect on corporate performance but the effect was not significant. When compared to equity finance, long-term debt finance showed a better effect on corporate performance. In conclusion, a recommendation was made, which is financial should treat the choice of capital structure with indifference.