THE CAUSE OF DEBT MATURITY IN SELECTED NIGERIAN FIRMS

📄 Project Abstract

Capital structure refers to the mix of long-term sources of funds, such as debentures, long-term debt, preference share capital and equity share capital including reserves and surpluses (i.e. retained earnings). Some firms do not plan their capital structure, and it develops as a result of the financial decisions taking by the financial manager without formal planning. These firms may prosper in short-run, but ultimately they may face considerable difficulties in raising funds to finance their activities. With unplanned capital structure these firms may also fail to economise their capital structure to maximize the use of the funds and to be able to adapt more easily to the changing conditions. The technique of cash flow analysis is helpful in determining the firms debt capacity. Debt capacity is the amount which a firm can service easily even under adverse condition; it is the amount that the firm should employ. There may be lender who is prepared to lend to firm, but firm should b...