Effect of Finance Choices on the Financial Performance of Listed Agricultural Firms in Nigeria
Author : Joseph I Ajulo, KFA IBRAHIM, and Oluyemi Ayodele OLONITE
Abstract :
This study examined the effect of finance choices on the financial performance of listed agricultural firms in Nigeria. This study adopted ex-post factor research design. Data were sourced from annual reports and accounts of listed agricultural firms. The collated data were analyzed using descriptive statistics and Multiple Least Square Regression. The results revealed a significant positive relationship between short term debt, equity, interest coverage ratio and financial performance of listed agricultural firms in Nigeria at 0.05 level of significance. However, there was insignificant negative relationship between long term debt, firm size and financial performance of listed agricultural firms in Nigeria and also a negative but statistically significant relationship between debt ratio and financial performance was observed at 0.05 level of significance. This study therefore recommended that listed agricultural firms in Nigeria should use more of short term debt in financing their business activities; Government and financial sectors should provide available long term debt for registered farmers and also agricultural firms should be mindful of stringent conditions that may be attached to long term debts; listed agricultural firms in Nigeria should use debt to finance its activities but should be careful of conditions attached to debt. It is also recommended that listed agricultural firms in Nigeria should increase their equity in financing their business activities; listed agricultural firms in Nigeria should be careful of acquiring unnecessary debt as finance choices for their business because of the charges and interest (interest coverage) which they may need to cover in the long run and lastly, listed agricultural firms in Nigeria should enhance their firm size (such as the total asset value, the number of employees, or the total sales) for the purpose of improving their financial performance as firm size is capable of enhancing the financial performance of firms.
Keywords :
Agriculture firms, financial performance, finance choices, short-term debt, long-term debt, debt ratio, equity
