Abstract:
The main objective of the study was to assess the impact of capital structure on the financial
performance of listed firms in Ghana Stock Exchange. The researcher conducted a causal
survey to collect data from companies listed on the Ghana Stock Exchange market in order
to determine the current status of the subject under study with respect to one or more
variables. The researcher chose to employ a select of listed Ghana Stock Exchange
companies through a purposive sampling strategy. The researcher conducted a ratio
analysis on the 2015 financial statements of the selected firms and afterwards carried out
a correlation test to assess the relationship between the variables. For the purpose of this
study, only profitability and gearing ratios were considered. The researcher found that,
financial structure indeed affects the financial performance of firms listed at the GSE.
There existed a strong relationship between financial structure (capital gearing and debt to
equity) and profitability (ROCE, gross profit, net profit and asset turnover). The researcher
hence recommended that, management and owners of corporations needed not focus on
maintaining a specific leverage ratio but rather they should let the actual capital structure
be dictated by business needs. However, they were urged not to load the business with
more debt than it has the capacity to service as this would potentially lead to financial
challenges that ultimately could lead to bankruptcy. Also, there was need for the firms
listed on the Ghana Stock Exchange to have a strong capital structure which provides them
strength to withstand financial crises and offers shareholders a better safety net in times of
depressions.
Description:
A DISSERTATION PRESENTED TO THE DEPARTMENT OF ACCOUNTING
STUDIES OF THE UNIVERSITY OF EDUCATION, WINNEBA IN PARTIAL
FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF
BUSINESS ADMINISTRATION DEGREE IN FINANCE
AUGUST, 2017