DEBT TO EQUITY RATIO AND SALES GROWTH OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

Background: The relationship between a company's financial structure is an area of extensive research in corporate finance. Aims:  The general objective of this study is to investigate the effect of debt to equity ratio on the sales growth of listed oil and gas companies in Nigeria. Methods: The study covers a period of ten years from 2013 to 2022 using a population of twelve (12) oil and gas companies and a sample of eight (8) companies. Data for the study were obtained through secondary sources using annual financial reports of the listed companies on the Nigerian stock exchange for the period. Debt to equity ratio was the independent variable while sales growth served as the dependent variable. They were measured using Ordinary Least Squares Regression. Conclusions: Findings revealed that debt to equity ratio has a positive and significant effect on sales growth. It was concluded and recommended that companies in the Nigerian oil and gas sector strategically manage their Debt to Equity Ratio (DTER). Implications: This involves carefully balancing the benefits of leveraging through debt, such as interest tax shields, against potential financial distress costs.