Leverage and financial performance: The correlational approach

Leverage and financial performance: The correlational approach

MOHAMMED Musah, YUSH Kong

The purpose of this study was to examine the relationship between leverage and the financial performance of non-financial firms listed on the Ghana Stock Exchange (GSE). Panel data extracted from the audited and published annual reports of the Ghana Oil Company Ltd, Total Petroleum Ghana Ltd, Starwin Products Ltd, Camelot Ghana Ltd, Aluworks Ltd, Clydestone Ghana Ltd, African Champion Industries Ltd, Benson Oil Palm Plantation Ltd, Fan Milk Ltd, Guinness Ghana Breweries Ltd, Unilever Ghana Ltd, PZ Cussons Ghana Ltd, Produce Buying Company Ltd, Mechanical Lloyd Company Ltd and Sam Woode Ltd for the period 2008 to 2017 was used for the study. Both the descriptive and inferential techniques of data analysis were employed for the study. In the descriptive technique of data analysis, the mean, standard deviation, variance, minimum and maximum values, range, skewness and kurtosis of the study’s variables were analysed; whilst the Pearson Product-Moment Correlation Coefficient technique of data analysis was employed to establish the bivariate associations between leverage and the firms’ financial performance as measured by ROA, ROE and ROCE (inferential analysis). All the data analysis were conducted through the use of STATA version 15 statistical software package at an alpha (α) level of 5%(p≤ 0.05). From the study’s Pearson Product-Moment Correlation Coefficient output, leverage had a significantly negative association with the firms’ financial performance as measured by ROA. However, an insignificantly positive association between leverage and the firms’ ROE and ROCE was also established. Based on …

2019

https://scholar.google.com/citations?view_op=view_citation&hl=en&user=-U-tBVYAAAAJ&cstart=20&pagesize=80&citation_for_view=-U-tBVYAAAAJ:0EnyYjriUFMC

English