Impact of gearing on performance of companies

Impact of gearing on performance of companies

Author by Dr. Tunji Siyanbola

Journal/Publisher: Arabian Journal Of Business And Management Review

Volume/Edition: 3

Language: English

Pages: 68 - 80

Abstract

This study, impact of gearing on performance of companies, was carried out to ascertain the
role gearing plays in the performances of some selected companies in Nigeria. A survey
research design was adopted in which twenty workers of selected manufacturing companies
were used and data were collected using questionnaire. Three research hypotheses were
raised and tested; while the demographic information of the respondents were analysed using
simple percentage, the hypotheses were tested using t-test statistic at a significant level of
5%. The testing of the hypotheses revealed that: efficiently managed gearing could lead to
increase in earnings of the company; gearing is important for a company to stand the test of
time in a competitive market; gearing has direct relationship with the performance of a
company. Based on the findings and the fact that gearing provides some financial
advantages with positive impact on profitability, it was recommended that companies should
employ competent professional to take charge of monitoring all long term financing that the
company utilize, such officer should be mindful of the risk involved in this source of finance.


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