EQUITY FINANCING AND PROFITABILITY OF CONSUMER GOODS MANUFACTURING FIRM IN NIGERIA

Abstract

The study therefore investigated the relationship between equity financing practices and profitability of consumer goods manufacturing firms in Nigeria. The study proxied equity financing and profitability is measured using ROA, ROCE and gross profit margin. The study is anchored on two theories, pecking order theory and marketing timing theory. The study made use of ex-post factor research design. Regression and financial ratio are the techniques use for data analysis. The study population is twenty (20) listed consumer goods manufacturing firms listed on the Nigeria Exchange Group out of which 19 consumer goods manufacturing firms were sampled using Taro Yamane formula. The study found out that there is a significant relationship between equity financing and variables (ROA, ROCE and GPM) of profitability. The study also found out that there is a significant relationship between debt financing and variables (ROA, ROCE and GPM) of profitability. On the other hand, equity/debt financing significantly relates to ROA and GPM but does not significantly relate to ROCE. However, the study recommends that management of Nigeria listed consumer goods firms should work hard to optimize the capital structure of their firms in order to increase the profitability of the firm and enhance firm’s value.