EFFECT OF DEBT CAPITAL ON PROFITABILITY OF LISTED FOOD AND BEVERAGE MANUFACTURING FIRMS IN NIGERIAN EXCHANGE GROUP FROM 2011-2022

The debt capital has been the major source of manufacturing companies’ fund for the
purpose of productive investment to produce goods to enhance the economic
production of consumer goods and beverages but due to financial crime perpetrated
by managers to satisfy their selfish utilities, the profitability of most of productive
firms.). Therefore, this study was embarked upon to investigate the effect of debt
capital on profitability of listed food and beverage manufacturing firms in Nigerian
Exchange Group from 2011-2022 as the main aim of this study. The specific objectives
are to determine the effect of long term debt (LTD) on net profit margin (NPM) and
return on equity (ROE). Ascertain the effect of short term debt (STD) on net profit
margin (NPM) and return on equity (ROE). The research design is ex-post facto cross
sectional, and time series. The sample size for the empirical analysis is five (5) listed
food and beverage manufacturing firms in Nigerian Exchange Group, 2011- 2022, and
the statistical instrument used for the empirical analysis was standard ordinary least
square multiple regressions. Data were collected through historical data from the
annual reports of the selected listed food and beverage manufacturing firms in
Nigerian Exchange Group 2011- 2022, and it was diagnostically tested by the unit root
model to determine if the variables were at stationary, since the data were abnormally
distributed. The results indicated that LTD has an insignificant effect on NPM and ROE.
STD has insignificant effect on NPM and ROE. Therefore, the researchers’ concluded
that it could be that the long-term debt borrowed fund was mismanaged, and short
term debt is inefficiently utilized. Hence, this study recommended that management of
the manufacturing firms ought to create borrowing policy that will ensure the efficient
and effective management of the external fund to achieve their financial target.