Capital Structure And The Financial Performance Of Listed Manufacturing Companies On The Ghana Stock Exchange

ABSTRACT The study explored Capital Structure and The Financial Performance of Listed Manufacturing Companies on the Ghana Stock Exchange using panel data analysis. The study employed descriptive research design and quantitative approach. The study revealed that short term debt (STDA) has a positive and statistically significant relationship with ROE at 1% significance level. This means that firms with high profitability (ROE) uses more of short-term debt (STDA) as a source of financing. Therefore, the higher the STDA the higher the ROE. However, the relationship between short term debt (STDA) and ROA is not significant. This means that the STDA has no impact on the ROA of firms listed on the Ghana Stock exchange. The results from the analysis showed that the long-term debt (LTDA) has a negative and significant relationship with both ROE and ROA at 10% and 5% respectively. This means that long term debt (LTDA) reduces both the ROE and ROA of firms listed on the stock exchange in Ghana. The Total debt of the manufactured firms listed on Ghana stock exchange have a positive and statistically significant relationship with both ROE and ROA at 1% significance level. This indicates that as the overall debt of the manufacturing firms increases the profitability of the firms also increases. The firm size as a control variable has positive and statistically significant relationship with both ROE and ROA at 5% and 10% significance level respectively. This shows that as the size of the firm increases the profitability of firms also increases. Also, bigger firms listed on the stock exchange have a high profitability levels than firms that are smaller in size. The study also revealed that sales growth also has a positive and statistically significant relationship with both ROE and ROA at 1% significance level. This means that the higher the sales growth the higher the profitability of the firms listed on the stock exchange.