OPERATING LEVERAGE AND PRICE EARNINGS RATIO OF SELECTED LISTED MANUFACTURING FIRMS IN NIGERIA

OPERATING LEVERAGE AND PRICE EARNINGS RATIO OF SELECTED LISTED MANUFACTURING FIRMS IN NIGERIA

Author by Dr. Samuel Olaoye

Journal/Publisher: International Journal Of Economics, Commerce And Management

Volume/Edition: 8

Language: English

Pages: 211 - 222

Abstract

The purpose of this paper was to determine impact of operating leverage on price earnings ratio
of selected quoted Nigeria manufacturing firm in Nigeria from 2008-2014. Secondary data were
obtained from Factbook published by Nigerian Stock Exchange (NSE), financial statement and
annual accounts of the selected firms to investigate relationship between degree of operating
leverage and price-earnings ratio. Regression analysis was used to analyze the data obtained
for the study. The results showed a significant and positive relationship between degree of
operating leverage (DOL) and price-earnings ratio of Nigeria quoted manufacturing firms. The
study recommends that finance managers must be careful in using debts but must follow
Pecking order theory


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