Does Capital Structure Influences Working Capital Intensity and Growth Opportunity of a Firm: An Evidence From Tanzanian Firms

Ntogwa Ng'habi Bundala

Abstract


The study was based on determination of influences of capital structure on the working capital and growth opportunity of the listed companies in Tanzania. The study targeted to meet three objectives.  These objectives are to investigate  on how Tanzanian listed companies behave in their capital structure, working capital intensity and growth opportunity, to examine the influence of the capital structure on working capital intensity and growth opportunity of Tanzanian listed companies and to examine the potency of working capital (current asset) in advocacy of growth opportunity of Tanzanian listed companies. The study used descriptive study strategy on ten listed companies at Dar Es Salaam Stock Exchange as per October, 2012.  The documentary analysis and website survey used to collect the secondary data.  The multivariate multiples regression model used to analyses data. The findings of the study lay that the listed companies of Tanzania are unleveraged and growing fast and are illiquidity. It is found that there is no significant relation of capital structure, working capital and growth opportunity of Tanzanian listed companies. The potency of current asset to generate sales of companies is averaged at 0.555 Tanzanian shillings per one shilling of sales. It is recommended that companies aiming for growing should adhere to investment opportunity available in their companies and should prefer internal financing to external financing.


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DOI: http://dx.doi.org/10.5296/ijafr.v4i1.2874

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