Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

2019 ◽  
Vol 1 (1) ◽  
pp. 48-59
Author(s):  
Uzokwe Grace Onyinyechi
Keyword(s):  
Capital Structure ◽  
Coefficient Of Determination ◽  
Positive Sign ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
Explanatory Variables ◽  
Food And Beverage ◽  
Equity Ratio ◽  
State Of Affairs

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms.  Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014.   The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity   is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003.  The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.

Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

2019 ◽  
pp. 48-59
Keyword(s):  
Capital Structure ◽  
Coefficient Of Determination ◽  
Positive Sign ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
Explanatory Variables ◽  
Food And Beverage ◽  
Equity Ratio ◽  
State Of Affairs

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms. Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014. The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003. The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.

scholarly journals Analisis Variabel Yang Mempengaruhi Earning Per Share (EPS) Pada Industri Food and Beverage Di Indonesia Tahun 2013-2017

2021 ◽  
Vol 5 (1) ◽  
pp. 59
Author(s):  
Erni Alfisah ◽  
Kurniaty Kurniaty
Keyword(s):  
Secondary Data ◽  
Profit Margin ◽  
Coefficient Of Determination ◽  
Financial Industry ◽  
Current Ratio ◽  
Return On Equity ◽  
Simultaneous Test ◽  
Net Profit ◽  
Food And Beverage ◽  
Equity Ratio

The purpose of this study was to examine and analyze the effect of Current Ratio (CR), Debt to Equity Ratio (DER), Return on Equity ((ROE), and Net Profit Margin (NPM) on Earning Per Share (EPS) either partially or simultaneously. The research object used is the food and beverage industry which is listed on the IDX from 2013 to 2017. The type of research carried out is descriptive quantitative. The sample obtained after being carried out with a purposive sampling approach is 14 companies. The data used is secondary data in the form of reports financial industry food and beverage for the observation period. In this study, there are four variables, namely ROE, CR, DER, NPM as the independent variable and EPS as the dependent variable. The analysis techniques used are econometric analysis or classical assumption test, multiple regression, test of the coefficient of determination, and simultaneous test The results showed that the variables DER (X2) and ROE (X3) are partially significant significant effect on EPS (Y1), while the variables CR (X1) and NPM (X4) do not have a significant effect on EPS (Y1) and simultaneously CR, DER, ROE, and NPM have a significant effect on EPS.Keywords: Current Ratio, Debt to Equity Ratio, Return on Equity, Net Profit Margin, Earning per share

scholarly journals Analisis Faktor yang Mempengaruhi Struktur Modal pada Perusahaan Makanan dan Minuman yang Terdaftar di Bursa Efek Indonesia Periode 2013-2017

2020 ◽  
Vol 4 (1) ◽  
pp. 24
Author(s):  
Mariska Leviani Dan Indra Widjaja
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Sales Growth ◽  
Manufacturing Companies ◽  
Return On Assets ◽  
Food And Beverage ◽  
Negative Effect ◽  
Equity Ratio

This research aimed to examine the effect of Liquidity (Current Ratio), Profitability (Return On Assets), Sales Growth, and Firm Size toward Capital Structure (Debt to Equity Ratio) on manufacturing companies sector food and beverages in Indonesia Stock Exchange for period 2013 - 2017. The sampling technique used was purposive sampling and the sample collected consisted of 14 companies. Analysis using SPSS program. Based on statistical t test, the result of research show that Liquidity had a significant, negative effect on Capital Structure. Meanwhile, Profitability, Sales Growth, and Firm Size did not affect Capital Structure. Based on statistical F test indicates that variables Liquidity, Profitability, Sales Growth, and Firm Size simultantly affect Capital Structure on manufacturing companies sector food and beverage listed in Indonesia Stock Exchange for period 2013 - 2017.

scholarly journals Faktor-Faktor Yang Mempengaruhi Return Saham Perusahaan Pertambangan Batubara Di Bei Periode 2008-2015

2019 ◽  
Vol 3 (3) ◽  
Author(s):  
Rafail Widarko Dan Carunia Mulya Firdausy
Keyword(s):  
Coal Mining ◽  
Stock Return ◽  
Stock Exchange ◽  
Mining Industry ◽  
Coefficient Of Determination ◽  
Earning Growth ◽  
Return On Assets ◽  
Return On Equity ◽  
Independent Variables ◽  
Equity Ratio

The purpose of this research is to determine the influence of debt to equity ratio, return on assets, return on equity and earning growth partially and simultaneously to stock return of coal mining companies listed on the Indonesia Stock Exchange during the period 2008-2015. The populations in this research are all companies of coal mining industry listed in Indonesia Stock Exchange. Sampling was done by purposive sampling method, consisting of 8 companies. Based on the type of data and analysis, this research is quantitative research and the data source used is secondary data. Data collection method used is direct observation method. Based on multiple linear regression test, it can be concluded that debt to equity ratio, return on assets, return on equity have significant and positive influence toward stock return with significant value below 0.05, while earning growth have no influence toward stock return with significant value 0.9. Simultaneously, all the independent variables significantly influence the stock return with significant value 0.000143. Based on the coefficient of determination can be concluded that all the independent variables affect the financial performance by 26.92%.

scholarly journals Pengaruh Struktur Modal Terhadap Profitabilitas (Studi Pada Perusahaan Pertambangan Yang Terdaftar di Bursa Efek Indonesia Periode 2011-2015)

2018 ◽  
Vol 3 (3) ◽  
pp. 89-98
Author(s):  
Mitha Rahma Fauzan ◽  
Mukaram
Keyword(s):  
Regression Analysis ◽  
Capital Structure ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Secondary Data ◽  
Multiple Linear Regression Analysis ◽  
Two Dimensions ◽  
Return On Assets ◽  
Return On Equity ◽  
Equity Ratio

Capital structure is one of the issue that attract many researchers in the field of finance and an important issue for any company because of its capability to directly effect on companies’ financial position. This study aims to determine the effect of debt to equity ratio (DER) and debt to assets ratio (DAR) as the dimension of capital structure to return on equity (ROE) and return on assets (ROA) as dimensions of company profitability ratios, either simultaneously or partially on mining companies listed in Indonesia Stock Exchange period 2011-2015. This research was conducted by using multiple linear regression analysis and yielded two equations of regression model. The data obtained are secondary data using documentation method. The result of regression analysis shows that the two dimensions of capital structure have significant effect to both dimensions of profitability simultaneously. While partially, only DAR which have a significant effect on the ROE and ROA.

scholarly journals THE EFFECT OF FINANCIAL LEVERAGE TO THE PROFITABILITY AT SUB- SECTORS OF FOOD AND BEVERAGE COMPANIES LISTED ON INDONESIA STOCK EXCHANGE IN 2010-2014

AdBispreneur ◽  
2016 ◽  
Vol 1 (2) ◽  
Author(s):  
R. Ratna Meisa Dai ◽  
Marsa Khalida Nurahmi
Keyword(s):  
Stock Exchange ◽  
Debt Ratio ◽  
Financial Leverage ◽  
Return On Equity ◽  
Food And Beverage ◽  
Equity Ratio

ABSTRACT  This study examined the effect of financial leverage to the profitability at Sub-Sectors of Food and Beverage Companies listed on Indonesia Stock Exchange in 2010 – 2014 simultaneously and partially. Financial leverage seen from debt ratio and debt to equity ratio, then profitabilitas seen from return on equity.The result of the study revealed debt ratio and debt to equity ratio affected the profitability when it simultaneous. However, when it partial debt ratio did not affect the profitability positively, while debt to equity ratio affected the profitability positively. Keywords : financial leverage, debt ratio, debt to equity ratio, profitability, return on equity.   PENGARUH FINANCIAL LEVERAGE TERHADAP PROFITABILITAS PADA PERUSAHAAN SUB SEKTOR MAKANAN DAN MINUMAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2010-2014 ABSTRAK  Penelitian ini bertujuan untuk mengetahui pengaruh financial levarage terhadap profitabilitas pada perusahaan sub sektor makanan dan minuman yang terdaftar di Bursa Efek Indonesia periode 2010-2014 baik secara simultan maupun secara parsial. Financial leverage dapat dilihat melalui debt ratiodan debt to equity ratio, sedangkan profitabilitas dapat dilihat melalui return on equity.Hasil penelitian menunjukkan bahwa secara simultan kedua variabel independen, yaitu debt ratio dan debt to equity ratio secara bersama-sama berpengaruh terhadap profitabilitas. Untuk pengaruh secara parsial, hasil penelitian menunjukkan bahwa debt ratio tidak berpengaruh positif terhadap profitabilitas, sedangkan debt to equity ratio berpengaruh positif terhadap profitabilitas. Kata kunci : financial leverage, debt ratio, debt to equity ratio, profitabilitas, return on equity.

scholarly journals Analisis Faktor-faktor yang Mempengaruhi Return Saham pada Perusahaan Makanan dan Minuman (Food and Beverages) yang Terdaftar di Bursa Efek Indonesia (BEI) Tahun 2015 - 2018

2021 ◽  
Vol 5 (1) ◽  
pp. 62
Author(s):  
Junnei Liuspita ◽  
Indra Widjaja
Keyword(s):  
Stock Return ◽  
Explanatory Power ◽  
Profit Margin ◽  
Linear Regression Method ◽  
Return On Assets ◽  
Return On Equity ◽  
Independent Variables ◽  
Net Profit ◽  
Food And Beverage ◽  
Equity Ratio

This research aims to find out the influence of Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), Debt to Equity Ratio (DER), Earning Per Share (EPS) on the stock return of food and beverage companies listed in the Indonesia Stock Exchange for the period 2015 to 2018. The research sample consists of 13 companies, that were selected by using a purposive technique sampling method for the period of 2015-2018. The method to analyse the research questions was by using the statistical method of multiple linear regression method. The result found that Return on Assets (ROA), Return on Equity (ROE) have significant influences on the stock return. Whilst aNet Profit Margin (NPM), Debt to Equity Ratio (DER), and Earning Per Share (EPS) partially don’t have significant influence. The coefficient determination of this model was found to be about only 28,17%. This suggests that the five independent variables underestimated have a lack of explanatory power of the stock return of food and beverage companies. Hence, further studies to seek other independent variables in the model are suggested to improve the model underestimated. Tujuan dari penelitian ini adalah untuk mengetahui pengaruh Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), Debt to Equity Ratio (DER), Earning Per Share (EPS) terhadap return saham perusahaan makanan dan minuman yang terdaftar di Bursa Efek Indonesia untuk periode 2015 hingga 2018. Sampel penelitian, terdiri dari 13 perusahaan, dipilih dengan menggunakan metode teknik purposive sampling dengan periode penelitian 2015-2019. Metode untuk menganalisis pertanyaan penelitian adalah dengan menggunakan metode statistik regresi linier berganda. Hasil penelitian menemukan bahwa, Return on Assets (ROA), Return on Equity (ROE), secara parsial berpengaruh signifikan terhadap return saham. Sementara Net Profit Margin (NPM), Debt to Equity Ratio (DER), Earning Per Share (EPS) secara parsial tidak memiliki pengaruh yang signifikan. Koefisien determinasi model ini hanya 28,17%. Ini menunjukkan bahwa kelima variabel independen tersebut memiliki kurangnya pengaruh terhadap harga saham perusahaan makanan dan minuman. Oleh karena itu, penelitian lebih lanjut untuk mencari variabel independen lain yang dapat meningkatkan pengaruh terhadap harga saham yang tidak diestimasi dalam model ini.

THE CAUSAL RELATIONSHIP BETWEEN BANK CAPITAL AND PROFITABILITY

2007 ◽  
Vol 03 (01) ◽  
pp. 0750002 ◽  
Author(s):  
DAVID E. HUTCHISON ◽  
RAYMOND A. K. COX
Keyword(s):  
Capital Structure ◽  
Causal Relationship ◽  
Positive Relationship ◽  
Equity Capital ◽  
Bank Capital ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
The Us ◽  
The Relationship

The relationship between capital structure and return on equity (ROE) is examined. It is shown that for banks in the US, for the relatively less regulated 1983–1989 period as well as the more highly regulated 1996–2002 period, there is a positive relationship between financial leverage and the ROE. The analysis is extended to determine the relationship between return on assets (ROA) and equity capital. The evidence supports the hypothesis that there is a positive relationship between equity capital and ROA.

scholarly journals Financial Leverage and Firms’ Performance: Empirical Investigation of KSE-100 Index

ETIKONOMI ◽  
2018 ◽  
Vol 17 (1) ◽  
pp. 45-56 ◽  
Author(s):  
Farhan Ahmed ◽  
Iqra Awais ◽  
Muhammad Kashif
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Optimal Level ◽  
Annual Data ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
Listed Firms ◽  
The Impact

Capital generation to fund everyday operations and long-term expansions is a constant concerning element in the corporate world. This study aims to investigate the optimal level of capital structure that firms can adopt to improve their financial performance given the industry dynamics and economic circumstances of the country. Using Hausman’s specification test, annual data for the period 2005 – 2014 of Karachi Stock Exchange (KSE) 100 index listed securities has been collected to analyze the impact of financial leverage on the firms’ performance. Return on assets, return on Equity, and TOBIN’s Q are the proxies of financial performance analyzed against financial leverage for the KSE 100 index listed firms. The finding of the paper indicates that capital structure, leverage, interest cover and sales growth as most significant variables impacting firms’ profitability.   DOI: 10.15408/etk.v17i1.6102

scholarly journals DETERMINAN NILAI PERUSAHAAN (STUDI PADA BANK UMUM YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2015-2019)

2021 ◽  
Vol 6 (2) ◽  
pp. 81-106
Author(s):  
Dwi Epty Hidayaty ◽  
Wike Pertiwi
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Error Term ◽  
Hypothesis Test ◽  
Coefficient Of Determination ◽  
Return On Equity ◽  
Book Value ◽  
Independent Variables ◽  
Managerial Implications ◽  
Equity Ratio

Penelitian ini bertujuan untuk mengidentifikasi dinamika profitabilitas, likuiditas, dan struktur modal pada bank umum yang terdaftar di BEI periode 2015-2019, mengidentifikasi pengaruhnya dan memformulasikan implikasi manajerial dan merekomendasi kesimpulan bahwa ada pengaruh dari Return on Equity (ROE), Debt To Equity Ratio (DER), dan Loan To Deposit Ratio (LDR) terhadap Price To Book Value (PBV). Penelitian ini adalah penelitian kausal dengan pendekatan kuantitaif dimana variabel independennya adalah profitabilitas, struktur modal, dan likuiditas, sedangkan untuk variabel dependennya adalah perusahaan. Analisis data yang digunakan adalah analisis statistik inferensia. Penelitian ini menggunakan analisis regresi data panel yang diolah dengan menggunakan SPSS versi 23. Hasil penelitian didapatkan pada uji asumsi diketahui bahwa error term sudah memenuhi asumsi normal dan tidak terdapat multikolinearitas dan heteroskedastisitas. Pada uji hipotesis koefisien determinasi, diketahui bahwa sample dapat secara baik mempresentasikan total populasi, dan pada uji regresi simultan (Uji F) didapatkan bahwa variabel independen (ROE, DER, LDR) secara simultan berpengaruh signifikan pada variabel dependen (PBV). Dari hasil penelitian menyatakan bahwa Return on Equity (ROE) berpengaruh positif dan signifikan terhadap nilai perusahaan. Sedangkan untuk variabel lainnya seperti Debt To Equity Ratio (DER) berpengaruh negatif dan tidak signifikan terhadap nilai perusahaan (PBV) dan Loan To Deposit Ratio (LDR) berpengaruh dan signifikan terhadap nilai perusahaan (PBV). Kata kunci: Nilai Perusahaan, Profitabilitas, Struktur Modal, Likuiditas     This study aims to identify the dynamics of profitability, liquidity, and capital structure in commercial banks listed on the IDX for the 2015-2019 period, identify their effects and formulate managerial implications and recommend the conclusion that there is an effect of Return on Equity (ROE), Debt To Equity Ratio (DER), and Loan To Deposit Ratio (LDR) against Price To Book Value (PBV). This research is a causal research with a quantitative approach where the independent variables are profitability, capital structure and liquidity, while the dependent variable is the company. The data analysis used was statistical inferential analysis. This study uses panel data regression analysis which is processed using SPSS version 23. The results obtained in the assumption test note that the error term has met the normal assumptions and there is no multicollinearity and heteroscedasticity. In the coefficient of determination hypothesis test, it is known that the sample can represent the total population well, and in the simultaneous regression test (F test) it is found that the independent variables (ROE, DER, LDR) simultaneously have a significant effect on the dependent variable (PBV). From the results of the study states that Return on Equity (ROE) has a positive and significant effect on firm value. Meanwhile, other variables such as Debt To Equity Ratio (DER) have a negative and insignificant effect on firm value (PBV) and Loan To Deposit Ratio (LDR) has a significant and significant effect on firm value (PBV). Keywords: Firm Value, Profitability, Capital Structure, Liquidity

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