CAPITAL STRUCTURE AND PROFITABILITY OF FOOD PRODUCER COMPANIES IN SOUTH AFRICA

Authors

  • Kansilembo Aliamutu PhD in accounting, Department of Management Accounting, Faculty of Accounting and Informatics Durban University of Technology, South Africa. https://orcid.org/0000-0003-3870-7549
  • Kerry-Lee Gurr Senior Lecturer, Department of Financial Accounting, School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, South Africa https://orcid.org/0000-0001-6773-4277

Keywords:

Capital Structure, Profitability, South African Food Producer Companies

Abstract

This study examined the consumer products sector over eleven years (2011–2021), focusing on ten food production firms listed on the Johannesburg Stock Exchange, selected from a total of eleven companies. Financial data extracted from these firms' statements were analysed using the random effects model. The findings revealed that non-current liabilities (coefficient = 6.785681, p = 0.029801) and retained earnings (coefficient = 3.556491, p = 0.001701) had a positive and significant effect on return on equity. Additionally, equity capital was found to negatively influence firm performance, while retained earnings, current liabilities, and non-current liabilities contributed positively to profitability. The study concluded that retained earnings and liabilities are crucial sources of financing that enhance profitability in South African food production firms. It recommends that firms avoid relying heavily on equity capital unless measures are taken to offset its negative impact.

Downloads

Published

2024-10-30

Issue

Vol. 16 No. 3 (2024): International Journal of eBusiness and eGovernment Studies (IJEBEG)

Section

Original Article