Effect of Financial Leverage on Organizational Performance of Pharmaceutical Firms in Nigeria

The study examined the Effect of Financial Leverage on the organizational Performance of Pharmaceutical Firms in Nigeria. In line with the specific objectives of the study which is to ascertain the effect of debt ratio on earnings per share, dividend per share, and return on equity of pharmaceutical firms in Nigeria, It was revealed that company income tax and value-added tax positively and significantly affect earnings per share, dividend per share and return on equity. The findings imply that as the debt ratio increases, all the other variables will also increase but in an insignificant amount. Therefore, the debt ratio provides a sound benchmark for measuring earnings per share, dividend per share, and return on equity. It is recommended that Firms in Nigeria's Pharmaceutical Industry should strive to increase their turnover in other to improve their net profit after tax which will lead to an increase in their earnings per share. However, this should be done regardless of the debt ratio since it has no significant effect on earnings per share. They should zealously strive to improve their profits after tax, which will increase their dividend payout. The dividend is one of the major factors to consider by any rational investor. However, the debt ratio does not significantly affect dividends per share. The result of our analysis shows us that the debt ratio rate does not significantly affect the return on equity of firms in Nigeria's pharmaceutical industry. However, in the spirit of profit maximization, firms should strive to improve their profits after tax to increase their returns on equity.