FIRM SOLVENCY AND FINANCIAL PERFORMANCE OF LISTED INFORMATION AND COMMUNICATION COMPANIES IN NIGERIA
Keywords:
Firm Solvency, financial performance, return on assets, debt to equity ratio, debt to asset ratio and long-term debt to equity ratioAbstract
The study examined the relationship between firm solvency and financial performance of listed Information Communication Technology Companies in Nigeria. Specifically, the study examined the extent to which debt to equity ratio, debt to asset ratio and long-term debt to equity ratio relate to the return on asset of listed ICT companies in Nigeria. This research implemented an Ex-post Facto research design on a population of nine (9) listed firms ICT firms on the Nigerian Exchange Group. Secondary data were obtained from the financial statements of a sample of six (6) listed ICT firms over a ten (10) year period that spanned from 2012 to 2021. Pearson’s Product Moment Correlation Coefficient was carried out to determine the relationship between the variables. It was found that debt to equity ratio and long-term debt to equity ratio do not significantly relate to the return on asset of listed ICT firms in Nigeria while debt to asset ratio significantly and negatively relates to the return on asset of listed ICT firms in Nigeria at 5% level of significance. Additionally, the Panel Least Square regression result revealed that only debt to asset ratio has a significant effect on the ROA of listed ICT firms in Nigeria. The study recommended that managers of ICT firms in Nigeria should maintain lower level of debt to asset and pay keen attention to the level of long-term solvency of the firm in order to maintain a high financial performance.
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