ABSTRACT

This study investigates the impact of financial leverage on the financial performance of manufacturing companies in Nigeria, using ten selected manufacturing as our case study. The study covers a period of 7 years (2014-2020). The data for the study was gathered, presented, analysed and interpreted. From the result of analysis, the following findings were made: Leverage ratios which were captured using short-term debt, log-term debt and total debt ratios jointly have significant effect on returns on asset though the individual variable do not have specific significant effects on returns on capital employed. But the conclusion was arrived with respect to their residual statistics which shows that the three independent variables can explain to a significant, extent the changes that occur in returns on capital assets when considered jointly. In the analysis of hypotheses, the study found showed that short-term debt ratio has no significant effect on the returns on asset of the ten selected companies. Hence the null hypothesis was accepted. Again, the study found from the outcome of the beta co-efficient of long-term debt ratio that there is negative and no significant association between the variable and returns on asset of the selected companies. On the analysis of the third hypothesis, the study found a positive and no significant association between total debt ratio and returns on asset of the selected companies. The findings made on this analysis informed the acceptance of the null hypothesis at the juncture. Recommendation were made that the management of manufacturing companies in Nigeria should employ competent accountants to help monitor their financial performance and profitability position through efficient leverage management.