JEFMS Journal

ABSTRACT:

The study utilized the panel regression method of analysis to measure The Effect of Capital Structure on The Profitability of the Cement Industry in Nigeria. of 3 Cement companies in Nigeria by collecting data on the capital structure (Equity and Debt ratio) as well as on a controlled variable, between 2007 and 2019, a period of thirteen years. The Hausman test was used to determine the appropriate Model between the Fixed and Random Models, the two main methods appropriate for analysing panel data. The test affirmed the appropriateness of the Fixed Effect Model. The finding shows that capital structure has a positive and statistically significant impact on the industry's profitability. Because; each of the components of capital structure (D.R. and EQTY) is positive and significant since the respective p-values are less than the average critical value of 5% (0.05). This study recommends that managers of manufacturing companies (cement) increase the reliance on debt financing as a source of finance because they have much influence on profit generation on both returns on Equity (ROE) and return on asset (ROA), as indicated by regression results.

KEYWORDS:

Capital Structure, Profitability, Financing Decision, Strategic Management, Panel Data.