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IMO STATE POLYTECHNIC UMUAGWO, OHAJI
IMO STATE

AN ASSIGNMENT ON
QUESTIONAIRE ON POOR ENROLLMENT OF MALE STUDENTS IN IMO STATE POLYTECHNIC

NAME: NWANEDO DABERECHI JOSHUA
REG NO: 2014/ND/EEE/65410
COURSE TITLE: INTRODUCTION TO STATISTICS
COURSE CODE:
DEPT: ELECTRICAL ENGINEERING
LECTURER: MR. ONYEGBUCHULEM

FEBRUARY, 2015

DEFINITION OF CAPITAL
1. Financial assets or the financial value of assets, such as cash.
2. The factories, machinery and equipment owned by a business and used in production. “Capital” can mean many things. Its specific definition depends on the context in which it is used. In general, it refers to financial resources available for use. Companies and societies with more capital are better off than those with less capital.
INVESTOPEDIA EXPLAINS 'CAPITAL'
Capital is different from money. Money is used simply to purchase goods and services for consumption. Capital is more durable and is used to generate wealth through investment. Examples of capital include automobiles, patents, software and brand names. All of these things are inputs that can be used to create wealth. Besides being used in production, capital can be rented out for a monthly or annual fee to create wealth.
Capital itself does not exist until it is produced. Then, to create wealth, capital must be combined with labor, the work of individuals who exchange their time and skills for money. When people invest in capital by foregoing current consumption, they can enjoy greater future prosperity.
Capital has value because of property rights. Individuals or companies can claim ownership to their capital and use it as they please. They can also transfer ownership of their capital to another individual or corporation and keep the sale proceeds. Government regulations limit how capital can be used and diminish its value; the tradeoff is supposed to be some benefit to society. For example, when you sell a stock that has increased in value since you purchased it, you must pay tax on the capital gains. Those taxes are used for public purposes, such as national defense.
1. Introduction:
Capital structure represents a firm's financial framework which consists of the debt and equity used to finance the firm. Firms’ ability to carry out their stakeholders’ requirements is closely related to capital structure. Therefore, this foundation is an imperative piece of information that should not be disregarded. Capital structure in financial term means the way firms finance their assets through the mixture of equity, debt, or hybrid securities (Saad, 2010). In a nutshell, capital structure is a mixture of a company's debts (long-term and short- term), common equity and preferred equity (Akintoye, 2008). Capital structure is fundamentally on how a firm finances its overall operations and growth by using diverse sources of funds (Tsuji, 2011). The foremost contemporary theory of capital structure started with the article of Modigliani and Miller (1958). Since, then, various studies have been carried out to investigate the optimal capital structure in the absence of Modigliani-Miller’s assumption.

According to MM Theorem, capital structure theories function under perfect market condition. Different assumptions of perfect market have been identified and they include: absence of taxes, rational investors, perfect competition, absence of bankruptcy costs and efficient market. The theorem opines that capital structure of an organization is not connected to its worth in perfect market. In actual fact, capital structure of an organization is not easy to establish. Financial managers find it difficult to exactly determine the optimal capital structure. An incorporated organization has to issue a variety of securities in a numerous combination to come across particular combinations that can maximum its general worth which means optimal capital structure. Optimal capital structure implies that with a smallest amount weighted-average cost of capital there is maximization of the worth of the organizations. Although optimal capital structure is a concept that has been researched on severally, yet one cannot find any formula or theory that with certainty provides optimal capital structure for an organization (Tian and Zeitun, 2007).

Moreover, according to Barbosa and Louri (2005) various measures of performance have been identified in the literature, these include: productivity, profitability, customers’ satisfaction, etc.; these variables are inter-related in one way or the other. Meanwhile, financial measures are indicators of financial strength, weaknesses, opportunities and threats of any firm. The proxies of financial performance include: return on assets, return on investment, residual income, dividend per share and earning per share, among others.

1.1. Statement Of Problem:
Warokka, Herrera and Abdullah (2011) observed that the subject of optimal capital structure has been the focus of several studies. Capital structure of a firm is a blend of debt and equity employed in financing its operations. The capital structure decision is critical for the continued existence of any business organization as to the maximization of returns to stakeholders (Akintoye, 2008). Literature revealed that several studies have been carried out to investigate the relationship that exists between capital structure and performance (Onaolapo and Kajola, 2010; Warokka et al., 2011). However, the results of these previous studies have been conflicting. While some researchers reported positive relationship between capital structure and performance (Akintoye, 2008; Dare and Sola, 2010), others reported negative relationship (Iorpev and Kwanum, 2012). Yet still, some researchers reported that no relationship exists between capital structure and performance (Prahalathan and Ranjan, 2011). Thus, the relationship that exists between capital structure and performance remain controversial and open to further research.
1.2. Objective Of The Study:
The main objective of this study is to examine whether or not a relationship exists between capital structure and financial performance of firms in the Nigerian Manufacturing Industry. Specifically the study sets out to:
(i) Examine the nature of relationship that exist between capital structure and financial performance of firms in the Nigeria manufacturing industry between 2007 and 2011.
(ii) Identify the interdependence between capital structure and financial performance of firm in the Nigeria manufacturing industry between 2007 and 2011.
1.3. Research Questions:
In order to pursue the objectives, the following research questions have been raised:
i. Is there any relationship between capital structure and corporate financial performance of firms in the Nigerian Manufacturing Industry? ii. What is the nature of relationship that exists between capital structure and corporate financial performance of firms in the Nigerian Manufacturing Industry?

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