Sources of Financing and Optimizing Company’s Capital Structure
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Journal paper
Russian Journal of Entrepreneurship *
№ 5-2 / May, 2010
* Этот журнал не выпускается в Первом экономическом издательстве
Abstract:
The capital structure of an enterprise is formed by its own and borrowed funds. What is their optimal ratio? Borrowing has its advantages and disadvantages, and its volume depends on the size of the equity. In other words how to find the happy medium between insufficient financing and excessive debt? According to
the author, this problem should be solved by using the effect of financial leverage, which measures the increase in return on equity under the influence of the borrowed capital.
Keywords: capital structure, equity, financial strategy, funding sources, project finance, borrowings, return on assets
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