dc.description.abstract | It has been noted that whether to employ equity or debt sources of financing is an
important consideration for a firm that requires investing. There are many theories put
in place to support an equilibrium debt-equity structure in a notion to achieve the best
performances, for example the Modigliani-Miller theorem reflects that managers make
independent decisions regarding the choice of sourcing.Its relevant to state that this
research has further motivated other researchers to conduct more research about the
correlation existing between capital structure and firms financial performance. It is
therefore important to state that, the significant role of this study is to find out the
impact of capital structure on financial performance of companies quoted at the
Nairobi securities exchange in Kenya. The period that the study was conducted was
2015, and imperative to note that, during this period there is a lot of political unrest in
Kenya, that leads to uncertainty in the companies under the NSE, market. Debt ratio
was used as indicator determining the Return on Equity. In this regard it prepared a
very impressive researchable moments, since there is a lot of civil unrest that is
affecting the smooth flow of businesses. There are about 65 companies listed at the
NSE market, hence form the population of study. The Secondary data applied in this
study was obtained from the handbook of these firm s as well as their publications. The
data collected was analysis by the use of Regression Analysis Model as well as the
Statistical Package for Social Sciences Software. The findings indicate that when the
dept ratio is high, the return on equity also goes down. This therefore means , there is
need for the injection of capital to boost these businesses rather than borrowing, since
the benefit of the companies are less than the cost of production, hence impossible to
fund or services a loan. | en_US |