OKE Adesoji Aderemi
Department of Accounting and Finance
College of Management and Social Science
Fountain University Osogbo
oke.adesoji@fuo.edu.ng
RAJI Sadiq
Department of Accounting and Finance
College of Management and Social Science
Fountain University Osogbo
ADEMOLA Fadilat
Department of Accounting and Finance
College of Management and Social Science
Fountain University Osogbo
ABSTRACT
This study examines the effect of leverage on the financial performance of quoted consumer goods firms in Nigeria. Samples of 11 firms were studied using secondary data from published financial statements on the Nigeria Exchange Group (NGX) for a period of eight years (2015 – 2022). Leverage was measure using Long Term Debt Ratio (LTDR), Short Term Debt Ratio (STDR) and Interest Coverage Ratio (INCOV) and financial performance was measure as Return on Equity (ROE). The data used for this study were analyzed using descriptive statistics, correlation and Hausman Test and panel regression analysis with the aid of e-views 10 to establish the result. Hausman Test for panel result was used to ascertain the best estimator between fixed and random effect regression to be used for the study. It was discovered that long term debt ratio has a positive and significant effect on the financial performance of quoted consumer goods firms in Nigeria. Short term debt ratio and interest coverage ratio have a positive and insignificant effect on financial performance of quoted consumer goods firms in Nigeria used for the purpose of this study. The study concluded that leverage has significant effect on the financial performance of quoted consumer goods firms in Nigeria. The study recommended that firms should use optimal form of leverage to attain a positive effect on financial performance.