The Dynamics of Short-Term Debt Ratio and Firm Performance: A Comprehensive Study of Nigerian Manufacturing Firms

  • Olasehinde Vincent Omodara
Keywords: debt ratio, global financial crisis

Abstract

Nigeria's manufacturing sector grapples with persistent underperformance despite its rich endowment of human, material, natural, and financial resources. This study explores the intricate relationship between financial leverage and the performance of manufacturing firms in Nigeria. Drawing insights from recent data spanning 2007 to 2021, the research specifically focuses on short-term debt. The motivation stems from conflicting findings in existing literature, emphasizing the need for empirical justifications. The financial manager emerges as a pivotal figure responsible for optimizing the debt-equity mix, navigating the complexities of debt financing, and mitigating risks. The study addresses challenges faced by Nigerian manufacturing firms, such as non-performing loans, low liquidity, and operational risks post-Global Financial Crisis and during the COVID-19 pandemic. The goal is to provide comprehensive insights into the financial dynamics impacting the performance of these firms, contributing to a nuanced understanding of financial leverage and its implications.

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Published
2023-12-26