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ACCOUNTING.
DECEMBER 2017
CERTIFICATION
This research work has been read and approved as meeting the requirement for the award of
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DECLARATION
I, Ibrahim Babagana Geidam, hereby declare that this research work has been prepared by myself
and it has been conducted base on my knowledge and ability. All materials published and
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DEDICATION
I dedicate this project to my lovely parents. My late Mom, Malama Hauwa Aminu Maikanti
(Moram Aisami Maikanti), May her soul continue to rest in jannatul Firdausi, Ameen. My
beloved Dad, Alhaji Babagana Ibrahim Geidam FCAI, May the almighty Allah grant him long
December, 2017.
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ACKNOWLEDGEMENTS
My appreciation first and foremost goes to the almighty Allah, all praises and salutations are due
to Him. I thank him for the gift of life and for affording me with the ability, knowledge and strength
Sincere appreciation to my supervisor Prof. Junaidu Muhammad Kurawa. I thank you for the
intellectual guidance and mentoring that you have afforded me right from the inception of this
study to its conclusion. May Allah (SWA) bless you abundantly and grant you all your wishes,
Ameen.
I also acknowledge the encouragement and contributions of the entire Staff of the accounting
Department especially our head of department Asst. Prof. Ibrahim Magaji Barde, Prof Aliyu
Suleiman Kantudu, Asst. Prof Kabir Tahir Hamid, Asst. Prof. Hannatu Sabo Ahmad, Dr. Jibrin S.
Garko, Dr. Mukhtar Musa Bako, Malama Naja’atu Bala Rabi’u and all others that were not
mentioned here.
I am greatly indebted to my parents: my Dad, Alhaji Babagana Ibrahim Geidam (FCAI), my Late
Mum, Malama Hauwa Aminu Maikanti (Moram Aisami Maikanti), your tolerance,
encouragement, moral support and motivation cannot be over emphasized. Thank you for being
such great parents. Worthy of appreciation, my Grand Mum Karu Aisami Maikanti and my step
Mum Hajja Bintu Tijjani. I must also include in my appreciation the members of B. I. Geidam
family; my brothers Aminu, Mustapha, Auwal, Hassan, Hussaini and Ahmad Babagana Ibrahim
I wish to extend my sincere appreciations to the people who have supported me academically and
otherwise especially my mentors Mallam Rabi’u Saminu Jibril and Mallam TIjjani Ahmad (ACA)
my Uncle Lawan Bukar Ibrahim Geidam, my cousin Engr. Mustapha Zanna Abatcha, Musa
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Abdullahi, my friends Salahuddeen Yahaya Jalo, Alhassan Adamu, Abubakar Umar, Buhari
Sadauki and others I couldn’t mention. May Allah reward you all abundantly, ameen
In the same vein, I wish to also extend my sincere regards to my colleagues in the Department of
Accounting Class of 2016 especially Ibrahim Ibrahim Lawan, Auwal Abdullahi Yahaya, Aminu
Maitama Suleiman, Mahi Rabi’u Tahir, Umar Uba Wada, Bashir Yusuf Ibrahim, Nasir Aliyu
Haruna and to all others that were not be mentioned here, thank you for the brotherhood you have
shown me throughout the course of our study. May the almighty Allah in his infinite mercy
continue to guide, protect and shower his endless blessing upon you, Ameen.
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Table of Contents
CERTIFICATIONi
DECLARATIONii
DEDICATIONiii
ACKNOWLEDGEMENTiv
TABLE OF CONTENTSvi
LIST OF TABLESix
ABSTRACTx
SECTION ONE1
INTRODUCTION1
1.1 Background to the study1
1.2 Statement of the research problem4
1.3 Objectives of the study the study6
1.4 Research questions6
1.5 Research hypothesis7
1.6 Significance of the study7
1.7 Scope and limitations of the study8
SECTION TWO9
REVIEW OF RELATED LITERATURE9
2.1 Introduction9
2.2 Conceptual framework9
2.2.1 Concept of Leasing9
2.2.2 Operating Lease11
2.2.3 Finance Lease11
2.2.4 Concept of Financial performance12
2.2.5 Return on capital employed (ROCE)14
2.2.6 Return on equity (ROE)15
2.2.7 Return on asset (ROA)15
2.2.8 Leasing and financial performance16
2.3 Empirical studies18
2.4 Theoretical framework28
2.4.1 Static trade off theory28
2.4.2 Agency cost theory28
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2.5 Summary29
SECTION THREE30
RESEARCH METHODOLOGY30
3.1 Introduction30
3.2 Research design30
3.3 Population of the study30
3.4 Sample size and techniques32
3.5 Source and method of data collection33
3.6 Variables for the study33
3.6.1 Independent variable33
3.6.2 Dependent variable33
3.6.3 Control variable34
3.7 Techniques of data analysis and model specification34
SECTION FOUR35
DATA ANALYSIS, PRESENTATION AND INTERPRETATION35
4.1 Introduction35
4.2 Hypothesis 135
4.2.1 Descriptive analysis35
4.2.2 Correlation results36
4.2.3 Ordinary pooled leased square regression37
4.3 Hypothesis 238
4.3.1 Descriptive analysis38
4.3.2 Correlation results38
4.3.3 Ordinary pooled leased square regression39
4.4 Hypothesis 340
4.4.1 Descriptive analysis40
4.4.2 Correlation results41
4.4.3 Ordinary pooled leased square regression42
4.5 Findings and discussions of the result43
4.5.1 Relationship between leasing and ROCE of industrial goods sector43
4.5.2 Relationship between leasing and ROE of industrial goods sector44
4.5.3 Relationship between leasing and ROA of industrial goods sector45
4.6 Summary of findings46
SECTION FIVE47
SUMMARY, CONCLUSION AND RECOMMENDATION47
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5.1 Summary47
5.2 Conclusion48
5.3 Recommendation48
REFERENCE50
APPENDICES70
viii
LIST OF TABLES
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ABSTRACT
Leasing is an alternative means of financing plant, equipment and business vehicles. Leasing
remained attractive to investors cutting across the various sectors of the economy. Leasing
agreement as part of source funds to an entity improves the financial performance through it is
cost of capital. This is possible through the reduction of cost of capital by influencing the reduction
of leverage level. Likewise leasing improves the working capital of the firm, since the untied cash
can be invested in cash generating project and efficiency in assets utilization. Equipment leasing
gives substitute source of capital as well as cash in the acquirement of business acute assets and
equipment. Equipment leasing allows companies to acquire kit at a fixed rate, for a fixed period
of time, without having to procure the equipment from money thus not affecting the working
leverage level which improves the firm’s working capital. In line of the above mentioned, this study
examines the impact of leasing on financial performance (measured by ROCE, ROE and ROA) of
Nigerian industrial goods companies. The data for the study were collected from the annual
reports and accounts of the 7 sampled companies out of 23 companies in the Nigerian industrial
goods sector, that are engaged in lease financing and also listed on the Nigerian Stock Exchange
(NSE) not later than January, 2007. Pooled Ordinary Least Square Regression analysis was used
to analyze the impact of lease financing on ROCE, ROE and ROA. The results of the study revealed
that lease financing has significant impact on ROCE, ROE and ROA of industrial goods companies
in Nigeria. Therefore, the research recommends that firms should comply on the standard (IAS
17) requiring financing of all types of leases as result suggests that value is added through leases
financing
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SECTION ONE
INTRODUCTION
Business generally own fixed assets, but it is the use of the assets that matters, not their ownership.
One way to obtain the use of assets is to raise debt or equity capital and then use this capital to buy
them. An alternative way to obtain the use of assets is by leasing. Before the 1950s, leasing was
generally associated with real estate (land and building), but today it is possible to lease almost
any kind of asset, (Health administration press, 2009). The leasing industry has grown significantly
over the past 60 years. It begins in the 1950s in the United States and spread to UK and Japan in
the 1960s, and has been extending throughout developing countries in the middle of the 1970s.
Present day leasing started in Nigeria in the 1960s, over the years it has been contributing
significantly to the country’s development and it has continued to be in spite of the complex
working environment. Lease finance play an important role to meet up the financial requirements
of various sectors of an economy and there by contribute to the economic development of the
country as well as to the growth of the country’s financial system, (Umar, Hannatu and
Almustapha, 2016).
investment decisions, which generate positive net cash flows. The leasing decisions concerns
whether the firm should lease,borrow or buy the equipment. Therefore, it is a financing decision.
Corporate managers should examine the cost of both: Leasing and borrowing in order to select the
1
cheaper method of financing which increase the market value of the firm (Mohammad and Shamsi,
2008).
Leasing runs in Iraq from the date of the Pharaohs, thousands of years ago people were working
in the lease such as rental of agricultural land and agricultural equipment. Leasing was well known
in Islamic economics, in fact leasing exists in Islamic economics and is named Ijara and it leads to
acquisition (Orabi, 2014). Leasing presently is based on Western practice, as with regard to leasing
in the contemporary time, after the industrial revolution and after the Second World War, there
was a need for the use of industrial machinery and equipment to keep pace with developments.
Some countries were not allowed at that time to own land. The leasing companies were established
to help secure the land as well to finance industrial machinery and equipment, which was to keep
Leasing is an alternative means of financing plant, equipment and business vehicles. It is a contract
between an owner of equipment (the lessor) and another party (the lessee) giving the lessee
possession and use of a specific asset in return for payment of specific rentals over an agreed
period. The lessee may or may not be entitled to acquire title to the goods through the exercise of
an option to purchase, usually at the end of the lease term. The lessor’s role is to finance the
acquisition of equipment required by the lessee who will have selected the goods and dealt directly
with the supplier in determining their performance attributes and suitability (Salam, 2013). A lease
is an agreement between the owner of an asset (a lessor) and the prospective user of that asset (a
lessee). Having come to agreeable terms, the lessor transfers the use (but not ownership) of the
asset to the lessee and he (the lessee) agrees to pay rentals as compensation for the use of asset for
a particular period of time. Leasing remained attractive to investors cutting across the various
sectors of the economy. Asides the traditional practitioners made up of banks, finance houses and
2
leasing companies, new entrants from the insurance companies, discount houses,
manufacturers/vendors, oil services companies, stock broking firms and even government are
getting more involved in leasing. At present, in Nigeria there are over 350 established companies
evidenced by the increase in the entity’s worthiness (Asimokopoulos, Samitas and Papadugonas,
2009). Measures of financial performance fall into two broad categories: investors and accounting
returns. The basic idea of investors’ returns is that, the return should be measured from the
perspective of shareholders e.g. share price and dividend yield. Accounting returns focus on how
firms earning respond to different managerial policies which can be measured using different
Financial performance is the level of performance of a business over a specified period of time,
expressed in terms of overall profits and losses during that time. Evaluating the financial
performance of a business allows decision makers to judge the results of business strategies and
The political changes at the end of the eighties of the twentieth century have led to unprecedented
economic transformations represented by moving trend towards market economy, and the adoption
of the privatization policy which gave the private sector the largest relative weight in the economic
activity , and entailed the search for methods of financing new and more flexibility to suit the
conditions of the market economy to finance large capital equipment in the infrastructure sectors,
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and the implementation of programs of structural reforms to replace the declining traditional
funding sources. The research problem lies in the absence of the use of non-traditional methods of
financing, such as leasing, which can be used by the Nigerian industrial companies, as industrial
companies need to finance some of their projects due to lack of financial liquidity for these
establishment, which helps them to improve their financial performance. Despite the importance
of lease in the industrial companies, but most companies do not rely on leasing in their operations
Orabi, (2014)
Oko and Aham (2012) identify poor performance of the Nigeria lease market attributed
inadequacies in government policy and their impact on leasing and established that the level and
number of firms and industries that are on equipment leasing based in Nigeria are significantly
Several studies have been conducted on leasing in respect to firms’ performance and profitability
of different industries (Umar, Hannatu and Almustapha, 2016; Alazzam, 2015; Orabi, 2014;
Salam, 2013; Aurangzeb and Shujaat, 2012; Jabbarzadeh, Motavasel and Mohammad, 2012;
Hassan, 2009; Sama’ila, 2009 among others) in different countries. The outcomes of the researches
shows a mixed result, some researches established that leasing has positive impact on financial
performance (e.g. Umar, Hannatu and Almustapha, 2016; Alazzam, 2015; Orabi, 2014; Munene,
2014; Salam, 2013; Hassan, 2009 and Sama’ila, 2009) while researches by other researchers (e.g.
Aurangzeb and Shujaat, 2012; and Jabbarzadeh, Motavasel and Mohammad, 2012) maintained
that leasing has a negative impact the financial performance.Therefore,this creates a gap .
Most of the research in respect to leasing and financial performance of firms in Nigeria were
carried out on different sector of the Nigerian economy. For instance, Umar, Hannatu and
4
Almustapha carried out research in oil and gas industries in Nigeria(2016), Akinbola and Otokiti
carried out research in profitability performance on SMEs(2012), Hassan, carried out research on
kurfi(2009)on selected manufacturing firms. Moreover, All the studies used finance lease alone as
their independent variable, the result of which cannot be generalized on the entire lease financing
Therefore, this research will serve as an effort of assessing the impact of leasing (finance and
operating lease) on financial performance of industrial goods sector in Nigeria from the period of
The main objectives of this research work are to examine the impact of leasing on financial
I. Evaluate the relationship between leasing and Return on Capital Employed (ROCE) of
II. Examine the relationship between leasing and Return on Equity (ROE) of Industrial goods
sector in Nigeria.
III. Determine the relationship between leasing and Return on Asset (ROA) of industrial goods
sector in Nigeria.
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1.4 Research questions.
To be able to achieve the above purposes, the following would help the researcher to gather the
I. Does leasing have significant impact on Return on Capital Employed (ROCE) of Industrial
II. Does leasing have significant impact on Return on equity (ROE) of Industrial goods sector
in Nigeria?
III. Does leasing have significant impact on Return on Asset (ROA) of industrial goods sector?
In line with the objectives of the research, the hypotheses of the study have been formulated in
null form:
HO: Leasing does not have significant impact on Return on Capital Employed (ROCE) of
HO: Leasing does not have significant impact on Return on Equity (ROE) of industrial goods
sector in Nigeria.
HO: Leasing does not have significant impact on Return on Asset (ROA) of industrial goods
sector in Nigeria.
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1.6 Significance of the Study
This study is very important to various stakeholders in the economy. First, the study will generate
new knowledge by giving a multidimensional view on the effects of leasing financing on the
financial performance of firms listed at the Nigeria Securities Exchange and contribute to academic
Secondly, the findings of the study will inform finance and corporate executives tasked with the
responsibility of making financing decisions in corporate Nigeria. From the findings of the study,
it’s hoped that these executives are being guided and better informed when they consider lease or
Thirdly, the investors will be assisted in making rational investment decisions based on the
leasing as well as purchase of assets on the financial performance of the firm, the investors will be
better placed to identify firms with greater potential to grow their wealth if they invest in such
stocks.
Fourthly, creditors will be assisted in making assessment of the company’s risks in terms of
default. Depending on the findings of the study, creditors will be better informed on whether to
provide pure credit facilities or provide leasing options especially for highly levered firm (s) facing
financial distress. Finally, policy makers and the business community in general will be guided
when formulating policy options and regulation on lease financing in the country.
The study will examine the impact of lease on financial performance of Industrial goods sector in
Nigeria for the period of 2009-2018. Industrial goods sectors that will be studied are those that are
7
engaged in lease financing and are listed on the Nigerian Stock Exchange as at 1st January,2018
so that there will be a complete set of financial statement for the period under study. Leasing for
the research will cover both the finance leases and the operating lease in the Industrial goods sector
in Nigeria. Financial performance in this regard will be determined using accounting ratios Return
on asset (ROA) Return on equity (ROE) and return on capital employed (ROCE) that are widely
SECTION TWO
2.1 Introduction
This chapter reviews the literatures that are relevant to the problem under study. The review also
covers conceptual issues, empirical issues as well as the theoretical framework of the study.
Review of literature to explain the study variable will be carried out in this chapter. The literature
on firms’ financial performance will be reviewed, researches on leasing and financial performance
will also be reviewed. Various theories that explain the concept of leasing in relation to business
performance will also be reviewed and a theory underpinning the study will be adopted. From the
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reviews of the literature the researcher will be able to develop the gap existing in the literature
Leasing agreement as part of source funds to an entity improves the financial performance through
its cost of capital. This is possible through the reduction of cost of capital by influencing the
reduction of leverage level. Likewise leasing improves the working capital of the firm, since the
untied cash can be invested in cash generating project and efficiency in assets utilization.
Equipment leasing gives substitute source of capital as well as cash in the acquirement of business
acute assets and equipment. Equipment leasing allows companies to acquire kit at a fixed rate, for
a fixed period of time, without having to procure the equipment from money thus not affecting the
working capital (Justine Obiero 2016). This is because leasing improves performance in financial
perspective by reducing leverage level which improves the firm’s working capital
Organizations exist in competitive environment and they continuously seek ways to take lead in
their business activities, also the quest for good financial management strategy is not contestable
because every business needs a good and dependable cash flow to grow and this has necessitated
the companies to seek for ways of reducing cost of operations especially when it comes to asset
acquisition. Also, organizations have a lot of equipment and machineries to acquire which may
not be really necessary to be bought but lease in order to have adequate capital for their
operations. Leasing as a contract between the owner of an asset, the lessor and the prospective
user of that asset, the lessee, giving the lessee possession and use of the asset on payment of
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rentals over a period of time. The lessor retains ownership of the asset so that it never becomes
the property of the lessee or any third party during the tenure of the lease. (Akinbola, O A and
Otokiti, B O 2012).
Nigerian Accounting Standard Board (NASB) in information circular (2010) viewed leasing as a
contractual agreement between an owner (the lessor) and another party (the lessee) which conveys
to the lessee the right to use the leased assets for consideration usually periodic payments called
rent. In another research, Aurangzab and Muhammed (2012) viewed leasing as the contract
between two parties in which one party intimates the use of an asset to the other party for a given
A lease is a contract between a lessor and a lessee where the actual or constructive possession of
the assets owned by the lessor, along with the right to use such assets, is given to the lessee. The
lessee is under an obligation to return the assets to the lessor and dealt with them in accordance
with directions or terms of the lease contract. The contract is usually for a specified period of time
“the lease term” during which the lessee makes periodic payments of the “lease rentals” for the
A lease may be defined as a contractual arrangement in which a party owning an asset (lessor)
provides the asset transfers the right to use the equipment to the user (lessee) over a certain
agreed period of time for consideration in the form of return for periodic payment (rentals) with
or without a further payment. Leasing is the process through which the use of an asset is obtained
through a number of predetermined payments over a period of time. (Kampumure Joseph 2009)
Looking at the above definitions and views critically, the basic ingredient must be present to make
the definition of the leasing complete i.e. the assets to be leased, the lessor, the lessee and the
10
periodic payment for using the asset by the lessee. Therefore, leasing can be seen as a contractual
agreement granting the use of an asset to the lessee by the lessor within a specific period of time
in exchange of periodic payment of an agreed rental fee by the lessee to the lessor.
Furthermore, leases are classified under IAS 17 Leases, as operating lease or finance (Capital) at
inception, depending on whether substantially all the risks and reward of ownership transfer to the
lessee. Under finance lease, the lessee has substantially all of the risks and reward of ownership
An operating lease involves the leases only renting an asset over a time period which is
substantially less than the asset’s economic life. In such cases operating lease may run from 3-5
years. The lessor is usually responsible for maintenance and insurance. It is cancellable by the
lessee prior to its expiration, the lessor provide service, maintenance and insurance and the sum of
all lease payment by the lessee does not necessary fully provide for the recovery of the asset cost.
The leasing agency retains ownership of the equipment during the lease and recovers its capital
Operating lease, sometimes called service leases generally provide both financing and
maintenance. Additionally, operating leases are not fully amortized in that the payments required
under lease contract are sufficient for the lessor to recover the full cost of the equipment. However,
the lease contract is written for a period considerably shorter than the expected useful life of the
leased asset and the lessor expects to recover all costs eventually either by lease renewal payments
Finance lease, sometimes called capital lease are different from operating lease in that they (1)
typically do not provide for maintenance, (2) typically are not cancellable, (3) are generally for a
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period that approximates the useful life of the asset and hence, (4) are fully amortized. In a typical
finance lease, the lessee selects the item it requires and negotiates the price and delivery terms with
the manufacturer. The lessee then arranges to have a leasing firm (lessor) buy the equipment with
the manufacturer and the lessee simultaneously executes a lease agreement with the lessor, (Health
administration press, 2009). Finance lease otherwise called capital lease, is a commercial
arrangement where the lessee (customer or borrower) will select an asset (equipment, vehicle,
software), the lessor (Finance company) will purchase that asset, the lessee will have use of that
assets during the lease, the lessee will pay a series of rental or installments for the use of that asset,
the lessor will cover a large part or all of the cost of the asset plus earn interest from the rental
period by the lessee, the lessee have the option to acquire ownership of the asset (e.g. paying the
last rental or bargain option purchase price).the finance company is the legal owner of the asset
during the duration of the lease. However, the lessee has control over the asset providing them the
From the above one can rightly conclude that leasing is broadly categorized into operating lease
and finance lease as classified by IAS 17. Those who categorized leasing in more than these two
broad types are trying to explain the scope of these types for instance sales leaseback can be
categorized as either finance or operating lease depending on whether substantially all the risk and
A financial statement is a formal record of the financial activities and position of a business.
Financial statements comprise income statement, balance sheet and other statements that reveal
the financial position of a firm (Ms. Mandeep Kaur and Dr. Pooja Ohri 2016). The objective of
12
financial statement analysis is a detailed cause and effect study of the profitability and financial
position of the firm. Financial performance is also a general term use to indicate a company’s
overall financial health. It can be used to compare similar firms across the same industry or to
to any firm’s success especially as a firm grows and ventures in to new endeavors. Essentially,
financial performance tells a company how well it’s doing. It can also reveal information a firm
can use to respond to changes in its market or industry. Investors and analyst look at the company’s
return on investment (ROI) and its return on asset (ROA) as well as its merging growth rate or
Samita and Papadogonas, 2009). Measures of financial performance fall into two broad categories:
- Investor returns and accounting returns. The basic idea of investors return is that the return should
Financial ratio can be defined as a relationship between a two individual quantitative financial
information connected with each other in some logical manner, and this connection, is
considered as a meaningful financial indicator which can be used by the different financial
information users. Any financial ratio(s) might be useful and meaningful if we compare it with
other related meaningful information, either a present or past similar indicator(s) for the same
firm or similar firms in the same industry. Although financial ratios are considered useful and
practical in financial analysis, these financial ratios should be interpreted and analysed in a
rational manner with caution taken into consideration the limitations of these financial ratios in
order to get the expected meaningful result from it (Dr. Majed Abdel M. K, Dr. Said M. A. and
13
Dr. Firas N. D, 2012). Profitability ratios measure a company’s performance and provide an
indication of its liability to generate profit. As profits are used to finance or fund business
development and pay dividends to shareholders, a company’s profitability and how efficient it is
that is commonly use is return on Asset commonly referred to as (ROA), which measure
management performance. ROA tells the investors how well company uses its asset to generate
income. A higher ROA denotes a higher level of management performance (D. Amato, 2010).
Return on capital employed (ROCE) is a financial ratio that measures company profitability and
the efficiency with which its capital is employed. ROCE is a useful metric for comparing
profitability across companies based on the amount of capital employed. A higher ROCE
indicates more efficient use of capital. It should be higher than the company’s capital cost,
otherwise it indicates that the company is not employing its capital effectively and is not
generating shareholder value. For a company, the ROCE trend over the years is also an important
indicator of performance. In general, investors tend to favor companies with stable and rising
ROCE numbers over companies where ROCE is volatile and bounces around from one year to
the next. ROCE is a useful metric for comparing profitability across companies based on the
amount of capital.
( A. Kijewska 2016).
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2.2.6 Return on Equity (ROE)
revealing how much profit a company generates with the money shareholders have
earnings performance. The ROE tells common shareholders how effectively their money is being
employed. With it, one can determine whether a firm is a profit-creator or a profit-burner and
management’s profit-earnings efficiency. The higher a company’s return on equity, the better
management is at employing investors’ capital to generate profits (A. kijewska 2016). Return on
Equity (ROE) measures the rate of return for ownership interest (Shareholders’ equity) of
common stock owners. It measures the efficiency of firm at generating profit from each unit of
shareholder equity, also kwon as Net Asset minus Liabilities. ROE shows how well a company
ROE = Fiscal year Net Income divided by Total Equity (excluding preferred shares), ROE is best
( A kijewska 2016)
ROA tells you what earnings were generated from invested capital (assets). ROA for public
companies can vary substantially and will be highly dependent on the industry. This is why when
using ROA as a comparative measure, it is best to compare it against a company's previous ROA
15
numbers or the ROA of a similar company. The assets of the company are comprised of both
debt and equity. Both of these types of financing are used to fund the operations of the company.
The ROA figure gives investors an idea of how effectively the company is converting the money
it has to invest into net income. The higher the ROA number, the better, because the company is
Return on Assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
(ROA) is a tool that shows the percentage of how profitable a company’s assets are in generating
revenue. This number tells you what the company can do with what it has, i.e. how many Naira
of earnings they drive from each Naira of asset they control. It is a useful number in comparing
competing companies in the same industries. ROA over 5% are generally considered good (A.
kijewska 2016).
( A kijewska 2016)
Leasing plays a vital role to meet up the financial needs of various sectors of an economy and
thus contribute to the economic development of the country as well as to the deepening of the
country’s financial system. Leasing improves financial performance by influencing the cost of
capital (reducing the leverage level) improves the working capital of the firm (since the untied
16
cash can be invested in cash generating project and efficiency in utilization of the assets). The
underinvestment problem is mitigated because of the legal standing of leases to all outstanding
fixed claims. By segregating the claim on new project’s cash flows, leasing, unlike debt, limits
the wealth transfer from stockholders to existing bondholders. This helps firms undertake some
positive NPV projects which are otherwise foregone with risky/unsecured debt financing. The
principal reason for the existence of leasing is the differential tax benefits accruing to companies,
financial institutions and individuals from owning assets. Whereas a marginally profitable
company may not be able to reap the full benefit of accelerated depreciation, a high income
taxable corporation or individual may be able to realize such. In such a case, the former may be
able to obtain a greater portion of the overall tax benefits by leasing the asset from the latter
party as opposed to buying it. Due to competition among lessors, part of the tax benefits may be
passed on to the lessee in form of lower lease payments. However, the attraction to lease an asset
as opposed to buying it is not due to the existence of taxes per se, but due to the divergence in
abilities of the various parties to realize the tax benefits associated with owning an asset (Peter
S.W, Prof. Gregory S. N and Dr. Elizabeth N 2016). The significant idea of the monetary market
is the lease which is the contract where one party gets a long-term leasing contract (lessee) and
other party (lessor) receives a protected long-term debt, guaranteed of fixed outlays for a stated
period. Equipment funding gives substitute source of capital as well as cash in the acquirement
of business acute assets and equipment. Equipment funding allows companies to acquire it at a
fixed rate, for a fixed period of time, without having to procure the equipment from money thus
not affecting the working capital (Justine Obiero 2016). This is because leasing improves
performance in financial perspective by reducing leverage level which improves the firm’s
working capital.
17
2.3 Empirical Studies
Effects of lease financing on the financial Performance of companies listed on Nairobi securities
Exchange was studied by Justin Obiero (2016) with the aim of determining the effects of lease
result showed, lease financing and liquidity having positive effects on ROA whereas size and
Ms. Mandeep Kaur and Dr. Pooja Ohri (2016) did a study on the Effect of lease structure on
financial statements and performance of the company to ascertain the effect of lease structure on
the financial statements of the company and to analyze the effect of different lease structure on
the performance or profitability of the company. It was concluded that the current ratio is higher
in operating lease than financial lease so it indicates that firm using operating lease are generally
Sadam Hassan, Saira Naeem and Bilal Aziz (2016) did an empirical study on determinants of
leasing decision on financial performance of sugar sector of Pakistan using Dependent variable:
total lease shares, Independent variables: ROA, ROE, leverage, EPS and firm size to evaluate the
consequence of leasing decision on the financial performance of Sugar Mills listed on the
Pakistan and to Identify the determinants of leasing decision in Sugar Mills listed on the Pakistan
Stock Exchange. The findings from results suggest there are positive relationship between
dependent variables,Total Least Squares (TLS) and independent variables of ROA, ROE and
Leverage.But negative relationship between the dependent variable on Total Least Squares
18
A study on the Effect of Leasing on the Financial Performance of the County Government of
Trans Nzoia(Kenya) was conducted by Peter Sindani Wafula, Prof. Gregory S. Namusonge and
Dr. Elizabeth Nambuswa (2016) using Dependent variable: Measures of financial performance
(ROA). Independent variable: finance lease. From the regression results, finance lease, had
positive effects on ROA. Financial performance of the county government of Trans Nzoia
Mary m. Mutune (2016) did an Investigation of leasing in asset financing: a case study of
investment companies listed at Nairobi securities exchange to evaluate the use of leasing as an
asset financing strategy by investment companies listed at the Nairobi Stock Exchange. The
result show that the benefits listed, were realized to a great extent in the different sectors. Result
show leasing considerations listed, were considered to a great extent in the different sectors.
Result show that challenges of leasing listed, were felt to a great extent in the different sectors.
Umar, Hannatu and Almustapha (2016) examined the impact of leasing on the financial
performance of oil and gas industry in Nigeria using the return on asset of the companies in the
oil and gas industry. The result of the study revealed that lease financing has significant impact
Michael kimiru kibuu (2015) studied the effects of lease financing on the financial performance
of companies listed in Nairobi securities exchange. He used Secondary method of data collection
19
and Market position, size of the company, liquidity and leverage as variables to arrive at the
conclusion that there is a positive association between lease financing and Return on Assets.
Though the relationship could be positive, it failed the significance tests at all the acceptable levels
of significance.
Olabisi jayeola, Ekpudu, j. and Dafe, p. Onou (2015) studied the determinants of leasing decision
Corporate tax Debt financing, Profitability Dependent variable: Leasing Decision to arrive at the
conclusion that debts financing and corporate tax have nothing to do with leasing decision in
Leasing Contracts and the Legal-Economic Characteristics of this Efficient Financial Instrument
in the Albanian Reality was studied by Artan Spahiu (2015) in Albania with the aim of precisely
highlighting the advantages of leasing contract compared with other contracts. The result showed
that leasing is profitable for all parties involved in it and as such leads to increased well-being and
indirectly in the development of the economic sector. This contract is a very good financing
alternative, especially for medium-sized and small businesses, which have limited opportunities to
Alazzam (2015) examined the extent of the presence of the motive of the contracting companies
in Irbid city (Jordan) to rely on finance lease and to identify the most important obstacles which
restrict its viability. The most important findings of this study are the existence of motives for
contracting companies in Irbid city to resort to lease financing. Financial leasing gives tax savings,
20
provide adequate liquidity and profitability ratios reassure and can cover the cost of fixed assets
profitability. The study also found out that the most important obstacles facing the constructing
companies is the lack of sufficient funds to finance companies using the financial leasing system,
and that many of the assets used by the contracting companies do not receive sufficient turnout by
Orabi (2014) assesses the impact of leasing decision on the financial performance of industrial
companies listed on the Amman Stock Exchange in the period of 2002-2011. The study revealed
that lease financing has statistically sufficient effect on the liquidity and profitability of the
Munene (2014) carried out a research on the effects of lease financing on the monetary
performance of corporations registered at NSE. This research included all the 62 listed
companies and adopted descriptive research design. Data for only 30 firms was available for the
period under study and therefore, it was used as the sample size. Secondary data was gathered for
the companies for the period of 2009 – 2013 from the monetary statements. The measures of
monetary performance were taken as the dependent factor whereas amount of Finance lease,
operating lease, liquidity, size of the firm and leverage was taken as the autonomous variable.
The study concluded that lease financing does not affect the monetary performance of registered
companies in Kenya.
Anna Białek-Jaworska and Natalia Nehrebecka (2014) studied the determinants of Polish
Enterprises' Propensity to lease. The specific objective of the study is to identify determinants of
21
financing the purchase of tangible assets by Polish enterprises with use of financial and operating
lease. Using Secondary method of data collection, the analysis indicate that medium-sized and
more inclined to finance their assets with capital leases than small business and that large
companies use more capital leases than small businesses do. It was found that a higher degree of
the long-term loan financing results in a lower degree of capital leasing, which indicates the
Financing Small and Medium Enterprises in Delta State, Nigeria using Survey and
significant role in profitability of small and medium scale enterprises to ascertain whether there
is a relationship between small and medium enterprises poor leasing attitudes and their finding.
The study revealed that many operators of small and medium enterprise do not assess lease
option and that affect their overall performance. The researcher concluded that equipment
leasing has a significant effect on the profitability of small and medium enterprises.
MD Aminul Islam (2014) did an Analysis of the Financial Performance of National Bank
Limitedin Bangladesh Using Financial Ratio. His study discovered that Despite the severe
unfavorable economic conditions of last few years, NBL achieved a worthy performance in all
22
Fazle Elahi Mohammad Faisal (2014) did Performance Evaluation of Lease Financing as an
Instrument of Financial Market in Bangladesh. The result of the study revealed that from the
factor analysis of leasing companies (borrowers who take lease from leasing companies), it has
been found that under first factor, the correlated variables are faster service for lease financing,
less procedural complexity for lease financing, fewer documentation and submission of
The operating lease is not much popular in Bangladesh. The culture of using operating lease has
not been developed yet in Bangladesh. The risk of becoming obsolete of the equipment or
Kelly, (2013) studied Impact of leasing on the financial performance of community Banks.
Using Secondary method of data collection, He Examined the impact of leasing on ROA of
community Banks, Access the impact of leasing on ROE of community Banks, Evaluate the
impact of leasing on exchange rate (ER) of community Banks. The result revealed that those
community banks that have non-zero leases are performing better than those with zero or no
Oko A. E. Ndu, (2013) studied the future and challenges of equipment leasing in Nigeria. He
used Secondary method of data collection to access the Positive Future Impacts of lease in
Nigeria and the result revealed the leasing facilities ease access to the much-needed assets for
Salam, (2013) examined the effects of lease finance on the financial performance of SME’s located
in Bangladesh in order to find out whether lease finance has any relationship with the return on
23
Equity (ROE) and return on Assets (ROA) of organization, the study established that firm
performance depend on lease finance activities signifying that SMEs in Bangladesh should
consistently involve in their lease finance practices because lease finance has a momentum impact
Furthermore, Akinbola and Otokiti (2012) ascertained the effect of leases option as a source of
finance on the profitability performance on SMEs and whether lease option has a relationship with
the productivity of an organization. A cross sectional survey research method with the use of
questionnaire instrument was adopted using a multi stage random sampling population of 300
respondents who are managers of SMEs in Lagos state. Analysis of variance and correlation
analysis were used in analyzing the data. The study discovers that lease option has positively
affected the profit of the SMEs. Also that lease option has influenced organizational output of the
companies.
In the other hand, Aurangzab and Shujaat (2012) determined whether any relationship exist
between financial lease and low profitability. However, the researcher found out that the
relationship of profitability with change in fixed assets due to financial lease are inversely related
i.e., when profitability of the companies decrease they tend to move to finance their fixed assets
In addition, lease financing as complement of debt financing Malik, Saeed, Ahmed and Jared
(2012) study analyses the effect of firm specific characteristics on the leasing tendency of Pakistani
listed companies. Balance sheet approach was used to approach total lease share for sample size
of 163 companies for 2009. The regression results proved that size and growth of the firm are
negatively related to the firm’s tendency to lease. Finding indicate that companies with low growth
24
potential are more tend towards leasing than companies with better growth rate. The results
demonstrate complementary relationship between lease and debt financing, more tending towards
leasing with greater debt payment ability. Restricted proves are therefore the positive association
Ali Raza, Muhammad Farhan and Muhammad Akram, (2011) studied the Leasing Industry in
of data collection. The intend of this study is to classify the leasing companies on the basis of
financial ratios and to make horizontal and as well as vertical analysis among leasing companies
for the period 2006-2009. The study concludes that ranking of leasing companies on the base of
net investment in finance lease is different from the ranking based on return on assets (ROA),
return on equity (ROE), return on revenues (ROR) and lease ratio (LR) and the ratios such as ROA,
ROE, ROR and LR are negative in 2009 due to the net loss after tax
Hassan (2009) examined the impact of finance lease on the profitability on Nigerian banks from
the period 2001-2008. The study employed the use of OLS regression to analyze the data from
annual financial statements of Nigerian banks and result of the study established that finance lease
has significant positive impact on the profitability of Nigerian banks. The study used finance leases
on independent variable while the dependent as banks profitability for the periods.
Kurfi (2009) sought to examine lease financing practices and corporate capital structure of selected
Nigerian manufacturing firms. The study sought to determine the extent to which the firms employ
lease financing as a means of digital assets acquisitions and the effect on corporate capital
25
structure. A survey method was adopted in selecting a sample of manufacturing firms listed in the
Nigerian Stock Exchange. The financial statements of the sampled manufacturing firms for Ten
(10) years period (1993-2002) were analyzed and also structured questionnaires and interviews
were granted to the financial managers of the firms. The findings of the study reveal that: leasing
is a veritable alternative for capital assets acquisitions and that lease constitute about 50% of their
total fixed assets because most of the lease contracts are structured with provision for ultimate
purchase by the lessee (the firm) after the primary lease term to finance capital assets acquisition.
Sama’ila (2009) analyzed the impact of finance lease on financial performance of conglomerate
companies listed on the floor of the Nigerian stock exchange from 2005 to 2006. The researcher
measures financial performance using three financial ratios, (ROA, ROE and ROCE) and data was
gathered from annual reports of the sampled companies. The data was analyzed using simple
regression analysis and the result of the study established that finance lease have positive impact
Joseph, (2009) assesses the relationship between leasing competence and perceived performance
of SMEs and also examined the relationship between lease structure and perceived performance
of SME in Uganda. The study results revealed that there is significant positive relationship between
leasing competence and perceived performance and also lease structure and perceived performance
Hassan Usman, (2008) studied the impact of finance lease on the Performance of Nigerian banks
using questionnaire and interview primary sources of data collection. The study establishes that
26
finance lease has no significant impact on the performance of Nigerian banks despite the
Siam and Qutaishat (2007), study aimed to describe the effects of financial leasing on the financial
performance of charter companies in Jordan, and the study found that the effect was positive by
increasing cash, profitability and reduce risk and this is what such an incentive for some companies
to come somewhat on the use of financial leasing in Jordan. And the most important
The Static Trade off Theory of capital structure suggests that firms will trade off the interest tax
shield benefits of the debt against the costs of financial distress such as bankruptcy. The theory
suggests that leases and debt are substitutes because leasing involves a fixed claim obligation
similar to debt and thus, consumes debt capacity. Therefore, an increase in leases will lead to a
corresponding decrease in debt. The empirical evidence on the lease – debt substitutability thus far
has been mixed. While there are some evidences of a complementary relation. Malik, Saed, Ahmed
and Jared (2012). Others find evidence that is largely consistent with trade-off theory that leases
The static trade-off theory predicts that the firms with higher expected cost of financial distress
will use fewer leases which imply a negative relation between financial distress and leasing
27
2.4.2 Agency Cost Theory
The main theoretical explanation for the relationship between the ownership structure and
profitability is based on the agency theory, first established by Jensen and Meckling in 1976.
Agency conflicts can arise between bondholders and shareholders or between managers and
In the present of risky debt in the firm capital structure, equity holders may under invest by giving
up positive NPV investments because the project’s benefit accrue to the existing debt holders and
the existing debt load makes it too costly for the firm to borrow in external capital markets this
creates the under investment problem due to debt overhang. However, in case of short term
operational leases, agency costs may also arise between lessor and lessee due to the separation of
ownership from usage of asset. Since the lessees have no right to the residual value of the asset,
they have no incentive to take proper care of it. This probably explains the reason why corporations
lease office facilities much more frequently than manufacturing or research & development
facilities. This theory entailed that lease financing bring about increase in efficiency on the part of
management of the firms which in turn would likely contribute to the financial performance of the
firm. Robicheaux (2008) examines whether lease financing, used to control the agency costs of
complementary to governance and incentive compensation suggesting that firms try to control
Therefore, agency cost theory will be adopted as underpinning the present research, that provide
28
2.5 Summary
Overall, academic literature underlines the advantages of leasing as an additional source of finance
for enterprises. It is an alternative mechanism to facilitate access to finance. Empirical results show
that leasing exposures are associated with relatively low risk compared to other forms of financing.
Various literatures on lease were discussed and reviewed in detail, in which the findings of some
researchers showed a positive impact of financial lease on financial performance, while some of
the findings resulted in negative problems of equipment leasing in Nigeria and have been
judiciously encapsulated. Theories on leases have been discussed and reviewed and after thorough
29
SECTION THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter gives a strategy that will be used to accomplish the research undertaking. The chapter
proposes the research design of the study, the intended population of the study, sample size and
sampling technique to be use. The chapter also provides method of data collection to be used,
Research design entails the structuring of investigation aimed at identifying variables and their
relationships to one another. It spells out the way and manner in which a research work is intended
to be carried out. These study will employ and expose the factor of research design because it
Industrial Goods Sector for the period 2009 to 2018. The research design
is justified based on the nature of the data to be collected and analysis to be carried out on it.
The population of this study will comprise of the entire Industrial Goods Sector as listed in the
Nigerian Stock Exchange. In this industry, there are total of twenty-three (23) Industrial Goods
30
Sector companies. Therefore, the population of this study is comprise with the twenty-three (23)
companies in the Industrial Goods Sector. The total population of the study is given in the table
below.
01 African Paints (Nig. Plc.) 16th March, 1974 30th July 1996
05 Cement Co. Of Northern Nig. Plc. 15th August, 1962 4th October, 1993
08 First Aluminum Nig. Plc 20th August, 1960 5th Nov, 1992
10 Paints And Coating Manufac. Plc. 16th March, 2001 2nd Nov, 2010
11 Portland Paints And Products Plc. 3th Sept, 1985 9th July, 2009
16 Nigeria Wire And Cable Plc. 20th Nov, 1974 5th July 1995
17 Avon Crowncaps & Containers Plc. 7th Dec, 1977 12th Jan, 1994
31
18 Beta Glass Co. Plc. 26th June, 1974 17th Feb, 1986
21 West African Glass Industry Plc. 20th April, 1972 21th August 1998
The best sample is a complete census of the study population itself because every element of the
population is represented in the population. Representativeness then is the hall mark of a good
sample (Asika, 2006). But, for the purpose of this research work a sample of seven (7) Companies
will be selected.
The sampling techniques to be employed in this study are the judgmental sampling of the non-
probability sample base on the filter that for an industry to be selected for the study, it should
satisfy two conditions:- Firstly, the company must be listed on the floor of the Nigerian Stock
Exchange (NSE) on or before January, 2007 so that it will have a complete set of annual report
and account to be used in the study and Secondly, it must be engage in lease so that data for the
independent variable will be obtained. The sample population is shown in table 3.2 below.
32
2 Berger Paints Plc. 9th Jan, 1959 14th Dec, 1974
3 First Aluminum Nig. Plc 20th August, 1960 5th Nov, 1992
6 Portland Paints And Products Plc. 3th Sept, 1985 9th July, 1992
This research work will use the secondary method of data collection and the data will be obtained
from the annual report and accounts of the seven (7) companies in the Industrial Goods Sector in
time, or takes different values in different situations. Therefore, the variables for this study are
explained below.
An independent variable is a variable that can take different values and can cause corresponding
changes in other variables. The independent variable for this study is the Total lease.
A dependent variable is a variable that can take different values only in response to an
independent variable. The dependent variable for this study is the financial performance.
Perf(ROCE)=FL+OL+FS+D
33
Perf(ROE)=FC+OL+FS+D
Perf(ROA)=FC+OL+FS+D1
The control variables for this study are Firm size and Debt.
The collected data will be analyzed using STATA Version 11.1 statistical package. A regression
analysis will be conducted on the data set to determine the impact of leasing on the ROCE, ROE
and ROA of Industrial Goods Sector. The correlation coefficient of the data set for each
leasing and financial performance. The result from the analysis will be organized, summarized and
presented using tables, so as to achieve the objectives of the study as well as test the research
hypotheses. For the purpose of this study the following linear regression equation will be used.
FP = a+b1Lit+b2Di+b3xSit+en.
Where:
o a = Constant
o b = Coefficient
o L = Leasing
o D= Debt
o S = Size
34
SECTION FOUR
4.1 Introduction
This chapter deals with presentation, interpretation and analysis of data in line with the objectives
of the study. The objective of the study is to examine the impact of leasing on financial
performance of industrial goods sector in Nigeria. Data collected for the study were analyzed using
a statistical package STATA. Hypothesis raised for the study were tested and the findings of the
study is summarized.
4.2. Hypothesis 1
Leasing does not have significant impact on Return on Asset (ROA) of Industrial goods sector in
Nigeria.
Descriptive statistic was used in this work to described the basic features of the variables. It shows
Mean and their standard deviation and minimum and maximum value of the variables.
35
Source: Authors computation using Stata 11.1
From the result in table 4.1, it was found that Lease has a high variability 5099156 (Maximum)
with 9970 (Minimum) and its mean is 800846 with an average standard deviation 1345594. ROCE
has a mean of 0.2865736, average standard deviation of 0.3188979, a high variability of 1.81977
(maximum) -0.2333582 (Minimum). Firm size has a mean of 14.88263 with average standard
deviation of 2.229166, a high variability of 19.93143 (Maximum) with 9.765489 (Minimum). Debt
also has a high variability of 7.907539 (Maximum) with 4.487845 (Minimum), it has a mean of
The correlation between the dependent and the explanatory variables are presented in Table 4.2.
Table 4.2 shows the correlation coefficients on the relationship between the dependent variable
(ROCE) and independent variables (Lease) together with the control variables (Firm size and
debt). ROCE is positively correlated with Total lease and firm size and negatively correlated with
Debt. The sign of the correlation coefficient indicates the direction of the relationship (positive or
negative). The correlation coefficient of Total lease and Firm size are 0.3855 and 0.8680 for ROCE
respectively which indicates that Total Lease and firm size are positively correlated with ROCE.
36
But the relationship between ROCE and Debt is negative as indicated by the coefficient of debt
The result obtained from OLS for ROCE is shown in the table below
The OLS result revealed that Total lease and firm size have positive impact on ROCE at 0.05
(significant) levels 0.000 for Total lease and 0.004 for Firm Size. This shows that increase in Total
lease and firm size at 5% level of significance will lead to an increase in ROCE. The result shows
a positive relationship between Total lease, Debt, Firm size and ROA. This will be evidence on
the T-Value of their coefficient (that is 4.61, 2.97 and 1.43 for Total Lease, Debt and Firm size)
respectively.
37
4.2.2 Hypothesis 2
Leasing does not have significant impact on Return on Equity (ROE) of Industrial goods sector in
Nigeria.
Descriptive statistic used in this work to described the basic features of the variables. It shows
Mean and their standard deviation and minimum and maximum value of the variables.
From the result in table 4.4, it was found that Lease has a high variability 5099156 (Maximum)
with 9970 (Minimum) and its mean is 800846 with an average standard deviation 1345594. ROE
has a mean of 0.1966396, average standard deviation of 0.3766781, a high variability of 1.408151
(maximum) -0.33687 (Minimum). Firm size has a mean of 14.88263 with average standard
deviation of 2.229166, a high variability of 19.93743 (Maximum) with 9.765489 (Minimum). Debt
also has a high variability of 7.907539 (Maximum) with 4.487845 (Minimum), it has a mean of
The correlation between the dependent and the explanatory variables are presented in Table 4.5.
38
Table 4.5 Correlation Matrix
Table 4.5 shows the correlation coefficients on the relationship between the dependent variable
(ROE) and independent variable (Lease) together with the control variables (Firm size and debt).
ROE is positively correlated with Total lease and firm size and negatively correlated with Debt.
The sign of the correlation coefficient indicates the direction of the relationship (positive or
negative). The correlation coefficient of Total lease and Firm size are 0.2034 and 0.3228 for ROE
respectively which indicates that Total Lease and firm size are positively correlated with ROE.
But the relationship between ROE and Debt are negative evident from the coefficient of debt -
The result obtained from OLS for ROE is shown in the table below
39
Table 4.6 Pooled OLS Regression
The OLS result revealed that Total lease and firm size have positive impact on ROE at 0.05
(significant) levels 0.002 for Total lease and 0.005 for Firm Size. This shows that increase in Total
lease and firm size at 5% level of significance will lead to an increase in ROE. The result shows a
positive relationship between Total lease, Debt, Firm size and ROE. This will be evidence on the
T-Value of their coefficient (that is 3.20, 2.89and 1.21 for Total Lease, Firm size and Debt)
respectively.
4.2.3 Hypothesis 3
Leasing does not have significant impact on Return on Asset (ROA) of Industrial goods sector in
Nigeria.
Descriptive statistic was used in this work to described the basic features of the variables. It shows
Mean and their standard deviation and minimum and maximum value of the variables.
40
Table: 4.7 Descriptive Statistic
From the result in table 4.7, it was found that Lease has a high variability 5099156 (Maximum)
with 9970 (Minimum) and its mean is 800846 with an average standard deviation 1345594. ROA
has a mean of 0.3624916, average standard deviation of 01.279004, a high variability of 9.126075
(maximum) and -0.132806 (Minimum). Firm size has a mean of 14.88263 with average standard
deviation of 2.229166, a high variability of 19.93743 (Maximum) with 9.765489 (Minimum). Debt
also has a high variability of 7.907539 (Maximum) with 4.487845 (Minimum), it has a mean of
The correlation between the dependent and the explanatory variables are presented in Table 4.8.
41
Table 4.8 shows the correlation coefficients on the relationship between the dependent variable
(ROA) and independent variable (Lease) together with the control variable (Firm size and debt).
ROA is positively correlated with Total lease and firm size and negatively correlated with Debt.
The sign of the correlation coefficient indicates the direction of the relationship (positive or
negative). The correlation coefficient of Total lease and Firm size are 0.1637 and 0.5007 for ROA
respectively which indicates that Total Lease and firm size are positively correlated with ROA.
But the relationship between ROA and Debt are negative evident from the coefficient of debt -
The result obtained from OLS for ROA is shown in the table below
The OLS result revealed that Total lease and firm size have positive impact on ROA at 0.05
(significant) levels 0.009 for Total lease and 0.001 for Firm Size. This shows that increase in Total
42
lease and firm size at 5% level of significance will lead to an increase in ROA. The result shows a
positive relationship between Total lease, Debt, Firm size and ROA. This will be evidence on the
T-Value of their coefficient (that is 2.71, 3.54 and 2.27 for Total Lease, Firm size and Debt)
respectively.
Hypothesis 1
4.4.1 Relationship between leasing and return on capital employed (ROCE) of industrial
A null hypothesis that leasing has no significant impact on the financial performance of industrial
goods sector was formulated to ascertain whether leasing has impact on Return on Capital
Employed (ROCE) of industrial goods sector in Nigeria or not. The hypothesis is tested and the
result of the Pooled leased square regression (OLS), reveals that the model has an R-Square of
0.30 which indicates that about 30% of variability in ROCE for the industrial goods companies is
explained by the variables in the model (namely total lease, firm size and debt of the industrial
goods companies), that is other contributors covered the remaining 70%. However, it observes that
at the 5% levels of significance, total lease and firm size is significant in explaining variability in
ROCE. This is evident from the P-Values of their coefficients which is less than 0.05 (i.e. 0.000
and 0.004). Also, debt is insignificance in explaining the variability in the model with a P-value of
0.156 It should be noted that with the exception of debt (which is insignificant in our model), the
coefficient for each variable has the expected sign of 0.000 and 0.004, for total lease and firm size
respectively. Hence as we expect, ROCE increases with an increment in firm size or total lease,
we also expect ROCE to decrease with any decrease in firm size or total lease. Therefore, we can
43
reject the Null hypothesis and accept the Alternative Hypothesis which said that there is a
significant relationship between Total Lease and ROCE. This is in line with the studies of Salam
and (2013) and Sama’ila (2009) which state that leasing has positive impact on ROCE.
Hypothesis 2
4.4.2 Relationship between leasing and return on equity (ROE) of industrial goods sector in
Nigeria.
In line with the null hypothesis that leasing has no significant impact on the financial performance
of industrial goods sector which is to ascertain whether leasing has impact on Return on Equity
(ROE) of industrial goods sector in Nigeria or not. The hypothesis is tested and the result of the
Pooled leased square regression (OLS), reveals that the model has an adjusted R-Square of 0.21
which indicates that about 21% of variability in ROE for the industrial goods companies is
explained by the variables in the model (namely total lease, firm size and debt of the industrial
goods companies), that is other contributors covered the remaining 79%. However, it observes that
at the 5% levels of significance, total lease and firm size is significant in explaining variability in
ROE. This is evident from the P-Values of their coefficients which is less than 0.05 (i.e. 0.002 and
0.005). Also, debt is insignificance in explaining the variability in the model with a P-value of
0.229. It should be noted that with the exception of debt (which is insignificant in our model), the
coefficient for each variable has the expected sign of 0.002 and 0.005, for total lease and firm size
respectively. Hence as we expect, ROE increases with an increment in firm size or total lease, we
also expect ROE to decrease with any decrease in firm size or total lease. Therefore, we can reject
the Null hypothesis and accept the Alternative Hypothesis which said that there is a significant
relationship between Lease and ROE. This is in line with the studies of Salam and (2013, Sama’ila
44
Hypothesis 3
4.4.3 Relationship between leasing and return on asset (ROA) of industrial goods sector in
Nigeria.
In line with the null hypothesis that leasing has no significant impact on the financial performance
of industrial goods sector which is to ascertain whether leasing has impact on Return on Asset
(ROA) of industrial goods sector in Nigeria or not. The hypothesis is tested and the result of the
Pooled leased square regression (OLS), reveals that the model has a low adjusted R-Square of 0.17
which indicates that about 17% of variability in ROA for the industrial goods companies is
explained by the variables in the model (namely total lease, firm size and debt of the industrial
goods companies), that is other contributors covered the remaining 83%. However, it observes that
at the 5% levels of significance, total lease and firm size is significant in explaining variability in
ROA. This is evident from the P-Values of their coefficients which is less than 0.05 (i.e. 0.009 and
0.001). Also, debt is insignificance in explaining the variability in the model with a P-value of
0.207. It should be noted that with the exception of debt (which is insignificant in our model), the
coefficient for each variable has the expected sign of 0.009 and 0.001, for total lease and firm size
respectively. Hence as we expect, ROA increases with an increment in firm size or total lease, we
also expect ROA to decrease with any decrease in firm size or total lease. Therefore, we can reject
the Null hypothesis and accept the Alternative Hypothesis which said that there is a significant
relationship between Total Lease and ROA. This confirms the studies of Justin Obiero (2016),
Peter Sindani Wafula, Prof. Gregory S. Namusonge and Dr. Elizabeth Nambuswa (2016) which
45
In addition, t-values in the regression results in table 4.3. 4.6 and 4.9, indicate that ROCE has the
highest value of 4.61 compared to those of ROE and ROA. This shows that leasing has greatest
impact on the ROCE than ROE and ROA. ROCE has the highest value of 4.6 followed by ROE
with a value of 3.20 and ROA with 2.71, This implies that ROCE receives the highest impact
followed by ROE and then ROA. In addition, the variable with smaller standard deviation
believed to have a greater impact from leasing (Esan and Okafor, 1995). While, ROCE happened
to have the lowest standard deviation of 0.3188979. This therefore produced the evidence of
rejecting the null hypothesis that leasing has no significant impact on financial performance of
industrial goods sector in Nigeria. The findings of this study confirms the outcome of Umar,
Hannatu and Almustapha, 2016; Alazzam, 2015; Orabi, 2014; Munene, 2014; Salam, 2013;
Hassan, 2009 and Sama’ila, 2009 while it contradicts the findings of Aurangzeb and Shujaat,
2012; Jabbarzadeh, Motavasel and Mohammad, 2012, Kelly, (2013) and Hassan Usman, (2008).
From the results of the study, the P-value of F-statistics is equal to 0.0000 which indicates that the
variability in ROCE, ROE and ROA. This is evident from the P-Values of their coefficients
which are less than 0.05. Hence as we expect, ROCE, ROE and ROA increases with an
increment total lease, we also expect ROCE, ROE and ROA to decrease with any decrease in
total lease.
46
SECTION FIVE
5.1 Summary
The study sought to examine the relationship between leasing and financial performance of listed
industrial goods companies in Nigeria. Chapter One, covers the background, statement of
problems, objectives of the study, scope as well as question and hypothesis raised for the study.
Chapter Two captured the conceptual framework, review of related literature, and theoretical
framework. Literature related to study was encapsulated and theory underpin the study was
adopted.
Chapter Three contained research design, population and sample size of the study, Variables for
the study, techniques and method of data analysis as well as variables and their measurement. Also,
In chapter four, data were presented and statistical package (Stata 11.1) was use in analysing the
data, the findings of the study was clearly discussed and summarized. The results indicate that at
5% level of confidence total lease is significance in explaining the variability in the model.
Finally, this chapter summarized the entire work and various recommendations were raised from
47
5.2 Conclusion
This study was set out to determine the impact of finance lease on financial performance of
industrial goods sector in Nigeria. The result of the study, indicates that relationship exist between
Lease financing has influence on Return on Capital Employed (ROCE) of firms in the Nigerian
Lease financing has influence on Return on equity (ROE) of firms in the Nigerian industrial goods
sector.
Lease financing has influence on Return on Asset (ROA) of firms in the Nigerian industrial goods
sector.
Thus, the financial performance of selected firm in the Nigerian industrial goods sector is affected
5.4 Recommendations
1. The study recommends that firms should improve on their lease financing since there is
2. The study recommends that firms should improve on their lease financing since there is
3. The study further recommends that firms should improve on their lease financing since
there is evidence that higher lease financing may lead to higher ROA.
48
4. The study also, recommends that firms should comply with the new standard requiring
lessees to capitalize all leases as evidence suggests that value is added through
capitalization of lease.
49
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55
LITREATURE TABLE
S/ AUTHO YE LOCAT TITTLE VARIAB METHO OBJECTI CONCLU
NO R(s) AR ION OF LES D OF VE(s) SION
ARTICL DATA
E COLLEC
TION
1 Siam and 200 Jordan Effects of Financial Secondar The study The study
Qutaisha 7 financial leasing y method aimed to found that
t leasing and of data describe the effect
on the profitabil collection the effects was
financial ity ratios. . of positive
performa financial by
nce of leasing on increasing
charter the cash,
companie financial profitabili
s in performan ty and
Jordan ce of reduce
charter risk.
companie
s in
Jordan.
2 Hassan 200 Nigeria The Independ Primary To assess, The study
Usman 8 impact of ent (question determine establishe
finance variable: naire and and s that
lease on leasing in interview) evaluate finance
the Naira. method of the lease has
Performa Depende data impact, no
nce of nt collection effects significant
Nigerian variables: . and impact on
banks. Profits, contributi the
Investme on of performan
nts, lease ce of
Sharehol financing Nigerian
ders on the banks
Fund. profitabili despite
ty, the
investmen positive
t volume relationshi
and .
sharehold
ers’ fund
of banks
in
Nigeria.
56
3 Sama’ila 200 Nigeria Impact of ROA, Secondar Analyze, Result of
9 finance ROE and y method Determin the study
lease on ROCE. of data e and establishe
financial Total collection Examine d that
performa lease and the impact finance
nce of firm size. of finance lease has
conglom lease on positive
erate ROA, impact on
companie ROE and the
s. ROCE of financial
conglome performan
rate ce of
companie conglome
s listed on rate
the companie
Nigerian s in
stock Nigeria.
exchange.
4 Hassan 200 Nigeria The The study Secondar Examine Result of
9 impact of used y method the impact the study
finance finance of data of finance establishe
lease on leases on collection lease on d that
the independ the finance
profitabil ent profitabili lease has
ity on variable ty on significant
Nigerian while the Nigerian positive
banks. dependen banks impact on
t as banks from the the
profitabil period profitabili
ity. 2001- ty of
2008 Nigerian
banks
5 Ali 201 Pakista Leasing Return Secondar The This
Raza, 1 n Industry on asset, y method intend of study
Muham in Return of data this study concludes
mad Pakistan: on collection is to that
Farhan A equity, . classify ranking of
and Comparis Return the leasing
Muham on of on leasing companie
mad Financial revenues, companie s on the
Akram. Performa total s on the base of
nce of lease and basis of net
Leasing lease financial investmen
Compani ratio. ratios and t in
es to make finance
horizontal lease is
57
and as different
well as from the
vertical ranking
analysis based on
among ROA,
leasing ROE,
companie ROR and
s for the LR.
period
2006-
2009.
6 Majed, 201 Jordan The Secondar Examine The
Said and 2 relations Profitabil y method relationsh results
Firas hip ity ratios, of data ip showed a
between activity collection between positive
ROA, ratio . the ratios relationshi
ROE and analysis. of ROA, p between
ROI with ROE, and the ROA,
Jordanian the ROI ROE and
insurance (together ROI ratios
public and together.
companie separately The
s’ market ) with the results
share Jordanian also
price insurance showed a
public positive
companie but low
s relationshi
p between
each of
ROA ratio
separately
and ROI
ratio
separately
.
7 Akinbola 201 Nigeria Effects of Variable: Questionn 1) To The study
and 2 lease as a Lease aire determine discovers
Otokiti source of option (primary) whether that lease
finance has method of lease option so
on the influence data option far has
profitabil d Small collection plays a positively
ity and . significan affected
performa Medium t role in the profit
nce of Enterpris profitabili of the
small and e ty of SME's.
58
medium profitabil Small Also that
enterpris ity Medium lease
es Enterprise option
(SMEs) s? 2) To have
ascertain relationshi
whether p with
there is a organizati
relationsh onal
ip output of
between the
lease companie
option s.
and
organizati
onal
output?
8 Aurangz 201 India The Profitabil Secondar To The
ab and 2 relations ity ratios y method determine researcher
Shujaat hip and of data whether s find out
between finance collection any that the
financial lease relationsh relationshi
lease and ip exists p of
profitabil between profitabili
ity financial ty with
lease and change in
low fixed
profitabili assets due
ty. to
financial
lease are
inversely
related
59
leasing companie s with
tendency s. better
of growth
Pakistani rate.
listed
companie
s.
10 Syed Sh 201 Pakista Relations Depende Secondar To study The
ah Fasih 3 n hip nt y method the results
Ur between variables: of data influence show the
Rehman Financial 1)EPS collection of positive
Leverage 2)Net . financial relationshi
and Profit leverage p of debt
Financial Margin on equity
Performa 3) Return financial ratio with
nce: on Asset and to return on
Empirica 4)Return investigat asset and
l on e whether sales
Evidence Equity 5) financial growth,
of Listed Sales leverage and
Sugar Growth has an negative
Compani Independ effect on relationshi
es of ent financial p of debt
Pakistan. variables: performan equity
Financial ce by ratio with
Leverage taking earning
(Debt/Eq evidence per share,
uity from net profit
listed margin
sugar and return
companie on equity.
s of
Pakistan.
11 Kelly 201 Nigeria Impact of Return Secondar 1) The result
3 leasing on Asset y method Examine, revealed
on the (ROA), of data Access that those
financial Return collection and communit
performa on Equity . Evaluate y banks
nce of (ROE) the impact that have
communi and of leasing non-zero
ty Banks efficienc on ROA, leases are
y ratio ROE and performin
(ER). ER of g better
Total communit than those
lease y Banks. with zero
or no
60
equipment
leasing
activity.
61
Natalia Propensit 2)Growth nts of term loan
Nehrebe y to opportuni financing financing
cka lease. ties. the results in
3)Structu purchase a lower
re of of degree of
assets. tangible capital
4)Bankru assets by leasing,
ptcy risk. Polish which
enterprise indicates
s with use the long-
of term bank
financial loan and
and capital
operating lease
lease. substituta
bility.
Akpala, 201 Nigeria Equipme Survey To The
16 I. J. and 4 nt and examine researcher
Oboro, Leasing Questionn if leasing concluded
O. G. as an aire option that
Alternati (primary) plays a equipment
ve Means method of significan leasing
of data t role in has a
Financin collection profitabili significant
g Small . ty of effect on
and small and the
Medium medium profitabili
Enterpris scale ty of
es in enterprise small and
Delta s. 2. To medium
State, ascertain enterprise
Nigeria whether s.
there is a
relationsh
ip
between
small and
medium
enterprise
s
poor
leasing
attitudes
and their
finding
62
17 Orabi 201 Jordan The Independ Secondar Identify There is
4 impact of ent y method the impact statisticall
leasing variable: of data of leasing y
on 1)leasing collection on the significant
financial Index 2) . financial effect of
performa Fixed performan the
nce of Assets ce, leasing
industrial Turnover profits, index on
companie index financial company’
s listed 3)Total risk and s financial
on Assets liquidity performan
Amman Turnover of ce, risk
stock index industrial and
exchange Depende companie liquidity
. nt s in in Jordan
Variables Jordan.
:
1)liquidit
y
2)profita
bility
3)risk.
18 MD 201 Banglad An Loans to Primary 1)To Despite of
Aminul 4 esh Analysis deposit (question Discussed severe
Islam of the Ratio naire and the unfavorab
Financial (LDR) interview) Financial le
Performa Cost to method of ratio economic
nce of Income data measurem conditions
National Ratio collection ent and of last few
Bank (C/I) . analysis. years,
Limited Return 2) To NBL
Using on Equity analyze achieved a
Financial (ROE) National worthy
Ratio Return Bank performan
on Assets trading ce in all
(ROA) recent core areas
Cash & years. 3) of
Portfolio To banking
Investme measure operation.
nt to profitabili
Deposit ty,
Ratio liquidity
Net and credit
Loans to managem
total ent of
asset
63
ratio National
(NLTA). Bank
19 Fazle 201 Banglad Performa Deposits Secondar To From the
Elahi 4 esh nce and y method identify, factor
Moham Evaluatio Borrowin of data discover analysis
mad n of gs (x1), collection and of leasing
Faisal Lease Employe . identify companie
Financin es (x2) the s, it has
g as an and reasons of been
Instrume Fixed competiti found that
nt of Assets on under first
Financial (x3). between factor, the
Market in Revenue banks and correlated
Banglade (y1) and leasing variables
sh. Non- companie are faster
interest s and the service for
revenue problems lease
(y2). of leasing financing,
companie less
s to procedura
compete l
with complexit
banks and y for lease
whether financing,
leasing is fewer
the document
substitute ation and
of term submissio
financing n of
in document
Banglades s in one
h or not. package
and
avoidance
of many
restrictive
covenants.
64
companie financing associatio
s listed in on the n between
Nairobi financial lease
securities performan financing
exchange ce of and ROA.
. companie
s listed in
the
Nairobi
Securities
Exchange.
20 Munene 201 Kenya The Depende Secondar The The study
4 effects of nt y method objective concluded
lease variable; of data of the that lease
financing measures collection research financing
on the of . is to does not
monetary monetary determine affect the
performa performa whether monetary
nce of nce lease performan
corporati Independ financing ce of
ons ent has some registered
registere variable; effects on companie
d at Finance the s in
Nairobi lease, financial Kenya.
Securitie operating performan
s lease. ce of
Exchang Control registered
e. variable; corporatio
liquidity ns in
and size. Kenya.
21 Olabisi 201 Nigeria Determin Independ Secondar 1)Assess The study
jayeola, 5 ants of ent y method relationsh implies
Ekpudu, leasing variable: of data ip that that debts
j. decision Business collection exists financing
and in Size . between and
Dafe, p. Nigerian Corporat business corporate
Onou quoted e tax size and tax have
manufact Debt leasing nothing to
uring financing decision do with
Compani , in leasing
es Profitabil Nigerian decision
ity. quoted in
Depende manufact Nigerian
nt uring quoted
variable: companie manufactu
s. ring
65
Leasing 3) companie
Decision Ascertain s.
the extent
to which
debt
financing
determine
leasing
decision
in
Nigerian
quoted
manufact
uring
companie
s.
22 201 Albania Leasing - Secondar The Leasing is
Artan 5 Contracts y method purpose profitable
SPAH and the of data of this for all
IU Legal- collection article is parties
Economi . precisely involved
c to in it and
Character highlight as such
istics of the leads to
This advantage increased
Efficient s of well-
Financial leasing being and
Instrume contract indirectly
nt in the compared in the
Albanian with other developm
Reality contracts. ent of the
economic
sector.
23 Alazzam 201 Irbid Financial Financial Secondar To The study
5 city leasing in performa y method examine found that
the nce of data the extent financial
construct indicator collection of the leasing
ion s (ROA, . presence gives tax
companie ROE) of the savings
s in Irbid and lease motives system
city finance. of the provides
contractin adequate
g liquidity
companie and
s in Irbid profitabili
city to ty ratios
66
rely on reassured
finance and can
lease. cover the
cost of
fixed
assets
profitably.
24 Justine 201 Kenya Effects of Secondar The The result
Obiero 6 lease y method objective showed,
financing of data of this lease
on the collection study was financing
financial . to and
Performa determine liquidity
nce of effects of having
companie lease positive
s listed financing effects on
on on ROA
Nairobi monetary whereas
securities performan size and
Exchang ce of leverage
e corporatio had
ns negative
registered effects on
at NSE. ROA.
25 Umar, 201 Nigeria The Financial Secondar The The study
Hannatu 6 impact of performa y method objective revealed
and leasing nce of data of this that lease
Almusta on the (Return collection research financing
pha financial on asset) . is aimed has
performa and lease at significant
nce of oil finance. examinin impact on
and gas g the the ROA
industry. impact of of oil and
Lease gas
Financing companie
on s in
Financial Nigeria.
Performa
nce.
26 Ms. 201 India Effect of Current Secondar 1) To It was
Mandeep 6 lease assets, y method study, concluded
Kaur and structure current of data analyse that the
Dr. on liabilities collection the effect current
Pooja financial , current . of lease ratio is
Ohri statement ratio, Gp structure higher in
s and margin, on the operating
67
performa net financial lease than
nce of income, statement financial
the total s and lease so it
company. expense, profiutabiindicates
net profit lity of the
that firm
margin, company. using
operating operating
lease and lease are
finance generally
lease. having
good short
term
financial
strength.
27 Sadam 201 Pakista An Depende Secondar To The
Hassan, 6 n empirical nt y method evaluate results
Saira study on variable: of data and suggest
Naeem determin total collection Identify there are
and Bilal ants of lease the positive
Aziz. leasing shares. conseque relationshi
decision Independ nce and p lease
on ent determina and ROA,
financial variables: nt of ROE and
performa ROA, leasing Leverage
nce of ROE, decisions but
sugar leverage, on the negative
sector of EPS and financial relationshi
Pakistan. firm size performan p between
ce of ROA and
Sugar ROE.
Mills
listed on
the
Pakistan
stock
exchange.
68
companie Multiplie determina influence
s from r nts of its ROE.
metallurg (EM) growth or
y and decline.
mining
sector in
Poland.
29 Peter 201 Kenya Effect of Depende Primary To From
Sindani 6 Leasing nt (question analyze results,
Wafula, on the variable: naire and the effect Financial
Prof. Financial Measures interview) of finance performan
Gregory Performa of method of lease on ce of the
S. nce of financial data financial county
Namuso the performa collection performan governme
nge, Dr. County nce . ce of nt of
Elizabet Governm (ROA). Trans Trans
h ent of Independ Nzoia Nzoia is
Nambus Trans ent County affected
wa Nzoia. variable: Governm by the
finance ent. level of
lease. lease
financing.
30 201 Kenya Investiga 1) Risk Primary The The result
Mary m. 6 tion of of (question purpose show that
Mutune leasing in Obsolesc naire) of the the
asset ence. method of study was benefits
financing 2) data to listed,
: a case Character collection evaluate were
study of istics of . the use of realized to
investme the leasing as a great
nt facility an asset extent in
companie required. financing the
s listed at 3) strategy different
Nairobi Financial by sectors.
securities challenge investmen
exchange s. t.
.
69
RESULT RATIOS
Company Name Year Ln Lease ROA ROE ROCE SIZE Log10DEBT
Ashaka cement plc 2018 10.29401 0.039282 0.052146 0.204636 18.06936 6.302465
Ashaka cement plc 2017 9.207336 0.063845 0.089085 0.214961 18.08558 6.580012
Ashaka cement plc 2016 9.207336 0.064125 0.089476 0.148137 18.08558 6.772652
Ashaka cement plc 2015 11.40088 0.042195 0.060323 0.229952 18.0265 6.871656
Ashaka cement plc 2014 11.40088 0.04195 0.05704 0.207335 18.02505 6.887291
Ashaka cement plc 2013 11.40088 0.04634 0.066308 0.367145 18.02664 6.913753
Ashaka cement plc 2012 11.40088 0.039282 0.052146 0.677806 18.06936 7.097887
Ashaka cement plc 2011 11.429 0.063845 0.089085 0.495801 18.08558 7.084098
Ashaka cement plc 2010 11.31386 0.182819 0.290709 0.55429 16.7319 7.083879
Ashaka cement plc 2009 11.32055 0.256061 0.380783 0.563275 16.66622 7.075565
First Aluminum plc 2018 13.10347 0.011332 0.021066 0.006011 15.96387 6.280788
First Aluminum plc 2017 13.19161 -0.11328 -0.22254 -0.23336 15.99776 5.415949
First Aluminum plc 2016 13.08428 0.003783 0.006823 -0.0468 15.94254 7.084972
First Aluminum plc 2015 13.12601 0.011691 0.021459 -0.04754 15.95354 6.442156
First Aluminum plc 2014 13.29097 -0.11585 -0.2247 0.008997 15.98696 6.549821
First Aluminum plc 2013 13.12601 -0.03785 -0.0621 -0.20666 16.09213 6.598715
First Aluminum plc 2012 15.26002 -0.00374 -0.00609 0.020972 16.14491 6.586745
First Aluminum plc 2011 15.24758 0.00308 0.004915 0.128012 16.13408 6.572608
First Aluminum plc 2010 15.23321 -0.01856 -0.06737 0.088264 15.95068 6.572608
First Aluminum plc 2009 15.20349 0.032235 0.099545 0.174141 15.26998 6.477219
Berger Paints plc 2018 13.88581 0.054606 0.086018 0.097202 15.22705 5.266119
Berger Paints plc 2017 13.77622 0.084786 0.127667 0.14508 15.17543 5.279601
Berger Paints plc 2016 13.74123 0.12821 0.2876 0.080837 15.68404 5.308129
Berger Paints plc 2015 13.70618 0.123974 0.254086 0.100688 15.82066 5.137924
Berger Paints plc 2014 13.60033 0.118505 0.14173 0.099878 15.82902 5.998479
Berger Paints plc 2013 13.70618 0.122916 0.282585 0.126256 16.09524 6.061191
Berger Paints plc 2012 13.7172 0.012143 0.02047 0.286301 16.31596 6.266894
Berger Paints plc 2011 13.11564 0.117468 0.209817 0.208629 16.53034 6.000099
Berger Paints plc 2010 13.11564 0.114094 0.213118 0.174001 14.42464 6
Berger Paints plc 2009 13.12316 0.108403 0.206955 0.167563 14.58604 5.999718
Grief Nig. Plc 2018 12.19753 0.034082 0.072942 0.110169 13.49046 4.963675
Grief Nig. Plc 2017 12.19753 0.037873 0.080658 0.112525 13.48104 4.487845
Grief Nig. Plc 2016 12.1157 0.065449 0.128903 0.155758 13.4057 4.907825
Grief Nig. Plc 2015 12.13976 0.044879 0.095957 0.203207 13.43339 5.148408
Grief Nig. Plc 2014 11.90788 0.034121 0.099667 0.088348 15.16537 5.129667
Grief Nig. Plc 2013 11.90788 0.043067 0.134416 0.12294 15.24792 5.51965
Grief Nig. Plc 2012 11.99831 0.061587 0.158841 0.137765 15.06783 5.560208
Grief Nig. Plc 2011 11.99831 0.04031 0.102867 0.018474 14.85364 5.514216
Grief Nig. Plc 2010 12.03111 0.056946 0.148102 0.201877 14.82562 5.514216
70
Grief Nig. Plc 2009 12.05654 0.088345 0.234375 -0.00564 14.79109 5.495001
Cap Plc 2018 11.40748 0.470289 0.702152 0.873992 15.04202 5.024674
Cap Plc 2017 10.04529 0.353857 1.144347 1.486018 15.40801 5.122331
Cap Plc 2016 10.16643 0.539594 1.408151 1.81977 14.94073 5.128832
Cap Plc 2015 10.19054 0.466817 1.117216 1.452147 14.92573 5.341498
Cap Plc 2014 10.19054 0.509897 0.997302 1.274696 14.59841 5.274352
Cap Plc 2013 10.19054 0.341813 0.655789 0.714907 14.93626 4.875813
Cap Plc 2012 10.55576 9.126074 0.54425 0.899854 11.47925 5.300869
Cap Plc 2011 11.24684 3.942661 0.451964 0.51045 11.36773 5.3018
Cap Plc 2010 11.24684 4.152955 1.071644 0.657066 12.08468 5.300052
Cap Plc 2009 11.28295 2.049994 0.410852 0.363373 11.67396 5.268344
Larfarge Wapco 2018 13.60355 0.059597 0.153267 0.080508 19.93143 5.857261
Larfarge Wapco 2017 13.60355 0.080647 0.191052 0.118621 19.84607 6.113304
Larfarge Wapco 2016 13.98212 0.017638 0.021907 0.082825 12.74731 6.110214
Larfarge Wapco 2015 13.98212 0.025271 0.043609 0.261079 11.98209 6.0723
Larfarge Wapco 2014 13.98212 0.095846 0.260404 0.222581 11.93454 6.070845
Larfarge Wapco 2013 13.98212 0.074371 0.17917 0.097004 11.66458 6.060834
Larfarge Wapco 2012 15.27628 0.276262 0.101075 0.097119 9.77951 6.051393
Larfarge Wapco 2011 15.27628 0.29015 0.115649 0.108207 9.765489 6.052877
Larfarge Wapco 2010 15.3695 0.053093 0.147318 0.27766 10.61172 6.063258
Larfarge Wapco 2009 15.44459 0.068497 0.160553 0.301286 10.2509 6.071433
Portland Paints 2018 11.39455 -0.13281 -0.33687 0.147246 14.37759 7.542483
Portland Paints 2017 11.39455 0.004526 0.012278 -0.16234 14.45699 7.907539
71
RESULT DATA
Total Cap.
Company Name Year equity Total Asset Employed PAT EBIT Debt Leases
Ashaka cement
plc 2018 53,015,238 70,376,125 12,288,292 2,764,527 2,514,625 2,006,619 29,555
Ashaka cement
plc 2017 51,261,632 71,526,871 20,418,412 4,566,667 4,389,168 3,802,001 9,970
Ashaka cement
plc 2016 51,261,632 71,526,871 15,970,229 4,586,667 2,365,777 5,924,501 9,970
Ashaka cement
plc 2015 47,162,040 67,423,536 14,920,274 2,844,964 3,430,941 7,441,422 89,400
Ashaka cement
plc 2014 49,514,245 67,325,232 12,128,292 2,824,311 2,514,625 7,714,197 89,400
Ashaka cement
plc 2013 47,126,004 67,432,563 5,700,938 3,124,848 2,093,071 8,198,858 89,400
Ashaka cement 12,528,16
plc 2012 53,015,238 70,376,125 7,218,717 2,764,527 4,892,887 0 89,400
Ashaka cement 12,136,62
plc 2011 51,261,632 71,526,871 6,324,108 4,566,667 3,135,497 6 91,950
Ashaka cement 12,130,50
plc 2010 11,618,084 18,474,436 1,591,820 3,377,481 882,330 0 81,950
Ashaka cement 11,900,50
plc 2009 11,633,603 17,300,110 2,369,345 4,429,884 1,334,592 0 82,500
First
Alluminuim plc 2018 4,610,450 8,570,793 4,610,450 97,123 27,714 1,908,923 490,642
First -
Alluminuim plc 2017 4,513,400 8,866,267 4,513,400 1,004,393 -1,053,239 260,585 535,849
First 8,389,910.0 12,161,08
Alluminuim plc 2016 4,652,178 0 5,945,331 31,742 -278,223 3 481,317
First
Alluminuim plc 2015 4,621,308 8,482,712 6,270,375 99,170 -298,070 2,767,935 501,827
First -
Alluminuim plc 2014 4,522,211 8,770,950 6,626,961 1,016,143 59,621 3,546,672 591,829
First
Alluminuim plc 2013 5,938,617 9,743,721 2,289,277 -368,809 -473,092 3,969,312 501,827
First 4,239,77
Alluminuim plc 2012 6,307,426 10,271,757 1,473,142 -38,409 30,895 3,861,404 1
First 4,187,33
Alluminuim plc 2011 6,367,385 10,161,113 1,529,791 31,298 195,831 3,737,732 9
First 4,127,60
Alluminuim plc 2010 2,330,333 8,458,512 1,467,680 -156,991 129,543 3,737,732 0
First 4,006,75
Alluminuim plc 2009 1,386,689 4,282,195 1,340,501 138,038 233,436 3,000,677 0
Berger Paints 1,072,83
plc 2018 2,604,181 4,102,265 2,795,918 224,007 271,770 184,552 0
Berger Paints
plc 2017 2,587,330 3,895,870 3,895,870 330,316 565,212 190,371 961,475
Berger Paints
plc 2016 2,888,204 6,478,787 3,640,145 830,647 294,258 203,296 928,413
Berger Paints
plc 2015 3,623,901 7,427,190 3,536,641 920,781 356,096 137,380 896,432
Berger Paints
plc 2014 6,262,279 7,489,585 2,848,115 887,554 284,465 996,503 806,398
Berger Paints
plc 2013 4,251,385 9,774,010 1,945,432 1,201,378 245,622 1,151,306 896,432
Berger Paints
plc 2012 7,230,000 12,188,000 1,815,912 148,000 519,897 1,848,816 906,371
Berger Paints
plc 2011 8,455,000 15,102,000 1,547,562 1,774,000 322,867 1,000,229 496,650
72
Berger Paints
plc 2010 984,430 1,838,830 1,407,058 209,800 244,829 1,000,000 496,650
Berger Paints
plc 2009 1,131,890 2,160,920 1,264,638 234,250 211,907 999,350 500,400
Grief Nigeria
plc 2018 337,584 722,490 341,267 24,624 37,597 91,976 198,298
Grief Nigeria
plc 2017 336,062 715,714 356,801 27,106 40,149 30,750 198,298
Grief Nigeria
plc 2016 337,022 663,773 372,558 43,443 58,029 80,877 182,718
Grief Nigeria
plc 2015 319,163 682,415 258,205 30,626 52,469 140,737 187,167
Grief Nigeria
plc 2014 1,320,400 3,856,900 634,629 131,600 56,068 134,793 148,432
Grief Nigeria
plc 2013 1,342,100 4,188,800 595,005 180,400 73,150 330,864 148,432
Grief Nigeria
plc 2012 1,356,432 3,498,445 570,327 215,457 78,571 363,252 162,480
Grief Nigeria
plc 2011 1,106,592 2,823,929 521,444 113,832 9,633 326,750 162,480
Grief Nigeria
plc 2010 1,055,811 2,745,896 315,424 156,368 63,677 326,750 167,897
Grief Nigeria
plc 2009 999,912 2,652,711 319,121 234,354 -1,800 312,609 172,222
portland paints
plc 2018 2,283,490 3,409,300 2,420,570 1,603,357 2,115,558 105,846 89,992
portland paints
plc 2017 1,520,133 4,915,999 1,575,462 1,739,559 2,341,165 132,535 23,047
portland paints
plc 2016 1,180,573 3,080,881 1,254,882 1,662,425 2,283,596 134,534 26,015
portland paints
plc 2015 1,268,148 3,035,012 1,350,439 1,416,795 1,961,036 219,532 26,650
portland paints
plc 2014 1,118,572 2,187,802 1,193,704 1,115,554 1,521,610 188,084 26,650
portland paints
plc 2013 1,598,672 3,067,145 1,786,756 1,048,391 1,277,365 75,130 26,650
portland paints
plc 2012 1,621,297 96,689 1,166,379 882,391 1,049,571 199,926 38,398
portland paints
plc 2011 754,442 86,485 888,976 340,981 453,778 200,355 76,637
portland paints
plc 2010 686,461 177,137 819,036 735,642 538,161 199,550 76,637
portland paints
plc 2009 586,146 117,473 1,106,665 240,819 402,132 185,500 79,455
176,151,72 453,012,39 363,624,89 26,998,27
Cap Nigeria plc 2018 9 7 1 3 29,274,869 719,882 808,998
175,579,94 415,947,50 340,226,66 33,544,98
Cap Nigeria plc 2017 7 2 5 1 40,358,133 1,298,087 808,998
1,181,29
Cap Nigeria plc 2016 276,664 343,627 63,398,258 6,061 5,250,933 1,288,885 1
120,900,46 1,181,29
Cap Nigeria plc 2015 92,641 159,866 3 4,040 31,564,518 1,181,137 1
120,097,74 1,181,29
Cap Nigeria plc 2014 56,109 152,442 4 14,611 26,731,466 1,177,185 1
120,074,35 1,181,29
Cap Nigeria plc 2013 48,306 116,376 1 8,655 11,647,686 1,150,360 1
120,089,68 4,309,28
Cap Nigeria plc 2012 48,291 17,668 4 4,881 11,663,019 1,125,624 0
4,309,28
Cap Nigeria plc 2011 43,710 17,422 76,488,793 5,055 8,276,596 1,129,476 0
4,730,29
Cap Nigeria plc 2010 14,635 40,608 43,669,041 2,156 12,125,133 1,156,798 9
73
5,099,15
Cap Nigeria plc 2009 12,077 28,308 34,847,805 1,939 10,499,152 1,178,781 6
Lafarge wapco 34,872,48
plc 2018 691,617 1,754,321 760,528 -232,985 111,985 1 88,836
Lafarge wapco 80,823,72
plc 2017 700,215 1,899,281 844,533 8,597 -137,105 0 88,836
Lafarge wapco
plc 2016 2,435,368 581,626 1,305,949 -33,106 304,497 45,119 65,901
Lafarge wapco
plc 2015 2,597,517 622,382 457,524 -26,149 174,309 136,400 65,901
Lafarge wapco
plc 2014 4,708,080 1,569,651 1,189,878 1,777 -114,715 500,195 65,901
Lafarge wapco
plc 2013 6,184,128 1,530,413 1,490,492 73,860 314,144 278,476 74,768
Lafarge wapco
plc 2012 2,315,817 1,787,014 1,001,994 125,574 209,224 467,416 74,768
Lafarge wapco
plc 2011 3,334,117 1,661,440 914,304 203,362 265,371 35,313 74,768
Lafarge wapco 739,908,73 359,850,58
plc 2010 1,172,445 957,357 9 122,969 0 321,158 74,768
Lafarge wapco 570,169,12 270,800,78
plc 2009 903,645 811,528 8 106,668 4 318,117 84,786
74
APPENDIX (TABLES)
___ ____ ____ ____ ____ (R)
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Notes:
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75
. regress roa lease size debt
------------------------------------------------------------------------------
roa | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
lease | .3934898 .1454561 2.71 0.009 .6839023 .1030773
size | .3139627 .0887332 3.54 0.001 .4911242 .1368012
debt | .5756237 .2536796 2.27 0.207 -.069136 1.082112
_cons | 13.81457 1.639141 8.43 0.000 10.54192 17.08723
------------------------------------------------------------------------------
------------------------------------------------------------------------------
roe | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
lease | 1.880564 .5879763 3.20 0.002 3.054496 .7066311
size | .2419699 .0836963 2.89 0.005 .4090749 .0748649
debt | .3234835 .2663469 1.21 0.229 -.2082954 .8552623
_cons | 14.45749 1.654321 8.74 0.000 11.15453 17.76045
------------------------------------------------------------------------------
------------------------------------------------------------------------------
roce | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
lease | 2.028985 .4401864 4.61 0.000 2.907846 1.150125
size | .2325196 .078286 2.97 0.004 .3888227 .0762165
debt | .3442726 .2401247 1.43 0.156 -.1351518 .8236971
_cons | 14.40589 1.486168 9.69 0.000 11.43866 17.37312
76