An Investigation Into The Impact of Debt Financing on the Value of Small Manufacturing Firms (SMFs) in Bulawayo, Zimbabwe

Abstract

The study focused on the impact of debt on the value of small manufacturing firms. The study based its arguments on Modigliani and Miller's theory of capital structure, postulated in 1958 and corrected in 1963. The primary aim of the study was to determine if there was any benefit gained by small manufacturing firms (SMFs) as a result of using debt as a source of funding. It also aimed at determining if size of the firm and the products it manufactured had a negative effect on the accessibility of debt to small firms. The study hypothesised that there was a negative relationship between debt and profitability. A negative relationship was also hypothesised between firm size, product manufactured and accessibility of debt.