Journal of accounting, business and social sciences Volume 3 number 2 June 2020 ISSN 2672-4235 (JABSS) 24 CAPITAL INTENSITY AND FIRM PROFITABILITY INTERCONNECTEDNESS IN NIGERIA *Nangih, Efeeloo (FCA, FCTI) and **Onuora, J. K. J. (Ph.D. CNA, FIMC, CMC) Department of Accountancy, Chukwuemeka Odumegwu Ojukwu University Igbariam Campus Anambra State, Nigeria. ABSTRACT This study examined the influence of capital intensity on profitability of listed oil and gas firms in Nigeria. It specifically sought to determine the extent to which property, plant and equipment, intangible non-current assets, non-current prepayments as well as investment property, affect the profit margin of oil and gas firms in Nigeria. The study adopts the ex post facto research design. Data was generated from nine (9) listed oil and gas companies, which were selected through the purposive sampling procedure. The period of the study was five years (2014 to 2018). The random effect regression model was used to analyse the relationships between the variables of study, after applying the Hausman Test. The results showed that all the variables had significant positive effects on the profit margin except intangible non-current assets, which was not significant. It was therefore concluded that firms with higher capital intensity were bound to perform financially better than those with lower ones. Consequently, it was recommended that oil and gas firms should strive to have an optimal capital intensity that will ensure improved performance of their firms at all times. Keywords: capital intensity, financial performance, profit margin, intangible assets, property plant and equipment, prepayments. Introduction The Nigerian Petroleum Industry plays a critical role in the economic development of the country and is considered as the biggest contributor to the national coffers, as well as the national economy. Therefore, an examination of the role and financial performance oil and gas companies is very vital not only to researchers but also to the managers of the economy of the country. The International Accounting Standards Board’s Conceptual Framework for financial reporting specifies that assets are resources under the control of the entity arising from past events from which future economic benefits are expected to flow to the entity. Further, the International Accounting Standards 1 that deals with the Preparation and presentation of financial statements classifies assets into two types- tangible and intangible non-current assets. Tangible non-current assets constitute major part those resources, capable of bringing about those benefits to entity. They entail assets held for use in the production or supply of goods or services or for rental to others, or for administrative purposes, which are controlled by the enterprise as a result of past events, and from which future economic benefits are expected to flow. Examples are property, plant and equipment (such as land, building, motor vehicles, furniture and fittings, plant and machinery, etc.); intangibles (such licenses and franchises, copyrights, patents, goodwill, etc.); investment property, non-current prepayments and so on. Chukwu and Egbuhuzor (2017) posits that the quality of non-current assets acquired by an entity indicate the competitive strength of the entity. They further stated that the stock of tangible assets available to firms determine how well their products can satisfy desired objectives. The term “Capital Intensity” describes the amount of cash or its equivalent invested in property, plant and equipment and other non-current assets of a business entity. The more capital invested, the more