Capital Structure and Firm’s Financial Performance; A Case of Sanlam Insurance Company (2010-2018)

Authors

  • Ms. Olive Uwingabiye Mount Kenya University, Kigali, Rwanda
  • Dr. Claude Rusibana (PhD) Mount Kenya University, Kigali, Rwanda

DOI:

https://doi.org/10.53819/81018102t2280

Abstract

This study examined the influence resulted in structure or arrangement of capital towards the financial performance of the firm. The SANLAM Ltd was taken as a case of study of eight years from 2010 to 2018 to assess the importance of the capital structure for a firm to better performance resulted in chosen finance companies in Rwanda. On other hands, the specific objectives are firstly, to assess the benefits of using the capital structure in selected finance company. Secondary, to assess the link connecting the capital structure and the performance of SANLAM Ltd. By using both quantitative and qualitative approaches, this study used aregression model to demonstrate the link between through by Return on Asset and Return on Equity. The researcher used Secondary data to attain objective stipulated in the study. The study employed both the Return on Equity and Return on Asset like dependent as estimator variables in variables under the study. The findings through regression analysis showed that debt ratio and the variable like tangible were accounted to be statistically were significant parameters impact the performance of obtained through  return on asset; for loan to the ratio of the deposit, size and debt, are not significant with performance .The results obtained through regression showed that  tangible is negative and statistically associated  with return about asset  and has a  positive statistically for the return towards equity  and has the probability value  of 0.088 and 0.416. The implication is that debt level stimulate the return on asset and reduce the loss due to extent that high use of leverage has to impose high interest rate. Finally, this study recommends that the firm has to develop new strategies and target in order to use more equity. On the side of government of Rwanda as well as policy makers have to minimize any rigidity measures that could prohibit the use ling term financial resources.

Keywords: Capital Structure, Firm’s Financial Performance, Sanlam Insurance Company, Rwanda

Author Biographies

Ms. Olive Uwingabiye, Mount Kenya University, Kigali, Rwanda

School of Business and Economics, Master Business Administration (Finance and Accounting Option), Mount Kenya University, Kigali, Rwanda

Dr. Claude Rusibana (PhD), Mount Kenya University, Kigali, Rwanda

Mount Kenya University, Kigali, Rwanda

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Published

2023-11-30

How to Cite

Uwingabiye, O., & Rusibana, C. (2023). Capital Structure and Firm’s Financial Performance; A Case of Sanlam Insurance Company (2010-2018). Journal of Finance and Accounting, 7(11), 198–217. https://doi.org/10.53819/81018102t2280

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Articles