The Financial Leverage Effect: Problems of Use in the Process of Optimization of the Enterprise Capital Structure
Анотація
The article is aimed at clarifying the feasibility of optimizing the structure of the company’s capital based on the effect of financial leverage for the simplest situation – in the absence of profit taxation and without considering the dynamic aspects, related to changes in the total volume and composition of assets. On the basis of use of the recognized theoretical provisions – the Modigliani-Miller postulates – the authors illustrate the fundamental difference of results of the capital structure optimization by the criterion of maximizing the profitability of equity, which stipulates use of the effect of financial leverage, and on the criterion of maximizing the value of the owners capital. It has been concluded about the disadvantage for owners of implementation in the above-mentioned static situation of any revision of the capital structure accompanied by an increase in the financial leverage ratio, as it does not lead to an increase in the value of enterprise, but only provides a threat to its decline, and worsens financial security. Building of any optimization models of the enterprise’s capital structure, including those based on use of the effect of financial leverage, has been recognized as not expedient in the considered situation.
Класифікація
Рецензії (0)
Написати рецензіюРецензій ще немає. Будьте першим!
Схожі роботи
Development of information systems and modeling of their implementation in the business
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies
MANAGERIAL REPORTING IN MANAGEMENT AND PLANNING SYSTEMS AT THE ENTERPRISE: FORMATION FEATURES AND CONTENT PARAMETERS
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies
FORMATION OF ORGANIZATIONAL ECONOMIC MECHANISM OF MARKETING BASED PARTNERSHIP BETWEEN ENTERPRISES
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies
CONCEPTUAL FOUNDATIONS OF TECHNOLOGICAL MANAGEMENT AND ITS IMPORTANCE IN THE MANAGEMENT OF MODERN ENTERPRISES
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies
TECHNOLOGY OF FORMATION OF ENTERPRISE EXPORT-IMPORT ACTIVITY MECHANISMS
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies
STRATEGIC MANAGEMENT OF ENTERPRISE DEVELOPMENT THROUGH USE-STATE OF LEAN-TECHNOLOGIES AT REGIONAL AND STATE LEVELS
Схоже за: Economic Issues in Ukraine · Enterprise Management and Information Systems · Economic and Business Development Strategies