The impact of capital structure on the performance of sugar firms: A case of Mumias Sugar

Analysis of the impact of capital structure on the performance of sugar firms was done on Mumias Sugar Company limited. The study used panel regression model of panel data analysis The Pearson's correlations were used to establish the degree of relationship between the independent and dependent variables. Panel regression analysis was employed for period covering 2006 to 2011 to measure the impact of capital structure on the performance of Mumias sugar firm in western Kenya. The analysis was done to find statistical evidence to support or reject the three hypotheses. Result for panel regression indicated that Earnings per share (EPS) are positive but statistically insignificant. Dividend per share (DPS) is negative and statistically significant. This indicates that there is there is significant impact of capital structure on the Dividend per share (DPS) of sugar industry. While, Earnings before Interest and Tax (EBIT) is positive and significant. This indicates that there is there is significant impact of capital structure on the Earnings before Interest and Tax (EBIT) of sugar industry. Beta coefficients associated with all the variables are statistically significant at 5% level. These variables explain around 92.9% of variation in Turnover as a measure of capital structure of the firms. The remaining variables incorporated in the model explain only 7.1% of the variation. These facts conclude that Dividend per share (DPS) and Earnings before Interest and Tax (EBIT) play a major role in on Turnover as a measure of capital structure of the firms, while (EPS) do a dismal role.