Author(s): Ntoung Agbor Tabot Lious*,Lehteno Chofor Innocent
In similar papers of past decades, researchers have emphasized that capital structure has a major role to play in organizational performance and firm sustainability. Financial Sustainability as a necessary condition for institutional permanence and long-lasting service has attracted scholarly attention in both the developed and developing world over several decades. However, most researches on sustainability have focused on responsibility (social and environmental) rather than time. This has made most research investigations to be limited to the big firms while ignoring the small and medium size enterprises which contribute so much to the economic development of developing countries like Cameroon. In this light, this work wanted to assess the effect of capital structure decisions on the long-run financial prosperity of small and medium size enterprises within the Littoral and the South West Regions of Cameroon. Capital structure was broken down to short-term debts, longterm debts and equity (owner’s equity and retained earnings). Sustainability was evaluated from return on asset and return on equity over a study period of fifteen fiscal years. The main objective was to examine how capital structure components affects the financial sustainability of small and medium-sized enterprises. Panel data was gathered from each annual financial statements of those specific companies’ websites. It was analysed using correlations, descriptive statistics and multiple regression with the aid of SPSS 23. From the findings, there exist a strong relationship between capital structure and financial sustainability. From the conclusions, it is recommended that firms should use shareholders’ funds as much as practical before they result to borrowing so as to minimize the risks related to debt financing.