Objectives of the study
The main objective of the study is to investigate the effect offinancial leverage on financial performance of companies with particular reference to quoted companies in Country. The specific objectives of this study are:
To examine the effect of debt ratio (DR) on Return on Assets(ROA) of quoted companies in the country.
To determine whether debt- equity ratio (DER) have any effect on Return on Assets (ROA) of quoted companies .
To establish if there is any effect of interest coverage ratio (ICR) on Return on Assets (ROA) of quoted companies in coutry.
Statement of Hypotheses Based on the objectives of the study, the following hypotheses were developed:
H1: There is a significant effect of Debt Ratio (DR) onReturn on Assets (ROA) of quoted companies in the country.
H2: Debt to Equity Ratio (DER) has a significant effect on Return on Assets (ROA) of quoted companies in country.
H3: There is a significant effect of interest coverage ratio (ICR) on Return on Assets (ROA) of quoted companies in country.
Methodology
The research work focuses on the empirical analysis of the effect of financial leverage on financial performance in some selected companies in country. The ex-post factor research design was used. . This research relied heavily on historic data as data used in the analysis were generated from annual financial reports of the selected companies , a period of 3 years. The variables that were tested in this study were Return on Assets (ROA), Debt ratio (DR), Debt-equity-ratio (DER) and Interest coverage ratio (ICR).In this study, Financial Performance proxy Return on Assets (ROA) is our dependent variable while Financial Leverage measured by DR, DER and ICR are our independent variables.
The population of this research work was five (5) food companies in country.
Method of data Analysis
Descriptive analysis was firstly applied todescribe relevant aspects of financial leverage and provided detailed information about each relevant variable. Correlation models, specifically Pearson correlation were applied to measure the degree of association between different variables under consideration while regression analysis was applied to examine the relationship of independent variables with dependent variable and to know the effect of selected independent variableson financial performance. By using this method, researchers will be able to identify the significant of each explanatory variable to the model and also the significance of the overall model.The model used was multiple regressions (more than one independent variables). The researcher also used Ordinary Least Squares (OLS) method for analysis of hypotheses stated in a multiple form. For this purpose of analysis the MS Excel Software was used to analyse financial data and SSPS Software used to run the regression.
I would appreciate if you help me out interpreting this tables! thankss
