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THE EFFECT OF CAPITAL STRUCTURE ON THE PROFITABILITY OF NON-FINANCIAL FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE

Listed non-financial companies are essential to a nation's economic development and prosperity. The expansion of an area's economy will be constrained by the absence of a vibrant non-financial sector. Companies in the sector will profit more from having an optimum and advantageous capital structure, including cost savings. The study's goal was to investigate the relationship between publicly traded non-financial firms' capital structures and their financial performance. The study's dependent variable was ROA, which is determined by dividing net income by total assets. Leverage was determined using the debt ratio. The natural log of all the assets was used to calculate size. Liquidity was assessed using the current asset to current liability ratio. Operating costs are compared to gross revenue to measure efficiency. The research concentrated on 40 non-financial companies listed on the NSE. Annual secondary data collection occurred for five years (January 2017 to December 2021). A descriptive design was used to analyze the study's factors. The analysis was carried out using SPSS software. The profitability of the NSE listed non-financial firms was positively and statistically significantly impacted by firm size and liquidity, whereas the profitability was negatively and statistically significantly impacted by capital structure. The report exhorts listed non-financial enterprises to strive for the greatest possible capital structure, improve liquidity, and increase efficiency because these qualities have a major impact on profitability.

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Author: monito deborah j m
Contributed by: zemuhindi
Institution: university of nairobi
Level: university
Sublevel: post-graduate
Type: dissertations