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BUA00205 - THE EFFECT OF CAPITAL STRUCTURE ON PROFITABILITY OF AN ORGANISATION


ABSTRACT

This study examined the implication of capital structure on profitability of an organization.

 

Capital structure refers to the way an organization finances its assets that is the composition of its source of finance.  Optimal capital structure is the minimum weighted   average cost of capital that maximizes the value of the firm.

 

Research questions that guided the study were delimited to 220 respondents drawn from various branches of Nigerian Breweries . The research instruments were  questionnaire and interview . The subject of the study  was selected using random sampling method, while the data were analyzed using frequency  tables and percentage. The analysis of the findings revealed that capital structure has an impact on the final value of a company.

 

In conclusion, this study recommends that manufacturing companies such as Nigerian Breweries should increase their level of borrowed capital.  Also, companies should determine an   appropriate mix of debt and equity to achieve the best goals.