DETERMINANTS OF CAPITAL STRUCTURE IN QUOTED AGRO-ALLIED COMPANY IN NIGERIA

Abstract

The study analyzed the determinants of capital structure in quoted agro-allied company in Nigeria (A study of British Tobacco Company in Nigeria). The specific objectives are to analyze the factors affecting capital structure in quoted agro-allied company in Nigeria. Debt to equity were used as a proxy to capital structure while the determinants were proxied by Liquidity ratio, dividend payout, total asset, profitability. The study adopted expo facto design and data were sourced from British Tobacco Company in Nigeria annual financial statement. The data were analyze and tested using multiple regression model. The result shows that liquidity ratio has positive and significant impact on debt to equity ratio while total asset and profitability negative and significant impact on debt to equity ratio. However, dividend payout has positive and insignificant impact on debt to equity ratio of British Tobacco Company in Nigeria. Based on the findings, the selected agro allied firm raising fund for operations or expansions should not give debt ratio (higher) priority. A rightful and correct combination of equity and debt must be ensured with equity given priority over debt. This is evidenced from the result when profitability on its own is negatively related with debt to equity but, leverage ratio is positively related.