EFFECT OF PTOFITABILITY ON TOTAL DEBT OF CONSUMER GOODS MANUFACTURING COMPANIES IN NIGERIA

Abstract

The study examined the effect of profitability on debt of consumer goods manufacturing companies in Nigeria. Ex Post facto research design was adopted for the study. A sample size of eighteen (18) quoted consumer goods manufacturing companies were selected from a population of 20 companies. Data were extracted from the annual reports and accounts of the samples companies from 2010 to 2021. Regression analysis was employed to test the hypotheses via E-view 9.0. Based on the analysis of data, the study found that profitability of company has a positive significant effect on debt of consumer goods manufacturing companies in Nigeria. The study recommended that because short-term debt has a positive effect on cash value added, firms should use more short-term debt in their capital structure to avoid paying a high cost of capital. Firms with more current assets, on the other hand, are less likely to be financially constrained.