Abstract:
This study investigated the relationship between the capital structure composition and the financial
performance of sugar firms in Tanzania. The research aimed to address existing research gaps and
shed light on the influence of capital structure composition on financial performance, specifically
within the Tanzanian sugar estate sector. To achieve this objective, a regression analysis was
conducted, with Return on Assets (ROA) serving as the dependent variable, reflecting financial
performance measured by ROA, and two components of capital structure: self-financing and the
long-term debt to asset ratio. These variables were employed to assess the capital structure
composition of the companies under scrutiny. The study uncovered a negative relationship between
capital structure composition and financial performance. The research used secondary data
sourced from two sugar estate companies operating in Tanzania during the years 2017 to 2022.
Data were extracted from reliable sources, including financial statements and annual reports.
Employing an Explanatory research design, the study enabled a comprehensive analysis of the
relationship between capital structure composition and financial performance. The selection of
companies for the study was based on purposive sampling, taking into account their availability and
relevance to the research topic. To ensure the validity and reliability of the findings, the regression
model underwent crucial diagnostic tests, validating the model's robustness and the statistical
soundness of the results. The study's outcomes contribute to the existing knowledge concerning
the relationship between capital structure composition and financial performance in the Tanzanian
sugar estate sector. In conclusion, the study determined that capital structure composition has no
significant impact on financial performance, aligning with the pecking order theory. These findings
hold practical significance for managers and decision-makers within sugar estate companies,
equipping them with valuable insights to make informed financing decisions, thereby enhancing
overall financial performance and profitability
