The enterprise capital structure management model

Abstract

Purpose. To create management algorithms for the enterprises capital structure and mathematical formalization of optimization of this structure. To investigate the dynamics of changes in the share of profitable enterprises to assess, analyze and forecast changes in the capital structure of homogeneous groups of enterprises. Methodology. Both empirical and theoretical methods of cognition are used to conduct the research. Methods of scientific observation and comparison are used to form the topic of scientific work, goals and objectives of the study. Methods of analysis and synthesis, induction and deduction, abstraction are used to determine the essential features of capital structure management. Methods of system structuring and modeling are used to create a mathematical model. The analogy method is used to find the weight factor of the objective function. The axiomatic method and the method of convergence from the abstract to the concrete were used for the practical application of the mathematical model, in particular, to analyze the dynamic index of related companies, stratified by size, industry, and so on. Findings. The dynamics of the preconditions for changing the capital structure is studied, the regularities of this change for groups of homogeneous enterprises are revealed. The uneven influence of the crisis on the approaches to the formation of capital structure in groups of homogeneous enterprises is revealed, and the reasons for this are investigated. The similarity of tendencies of formation of capital structure in groups of inhomogeneous enterprises is pointed out. A correlation was found between the decrease in the share of equity and a significant prevalence of external borrowing with an increase in net loss. Moreover, it is established that enterprises, whose total amount of equity and current liabilities is stable and comparable in size with external borrowing, show a decrease in losses. Originality. Algorithms for capital structure management and a mathematical model for optimizing capital structure are proposed. A method of comparative analysis of changes in capital structure for homogeneous groups of enterprises has been introduced, which provides an opportunity to assess the impact of external risks and crisis factors in the past and predict the necessary changes in capital structure during both the new crisis and after the crisis. Practical value. The developed algorithms and mathematical model can be used in research and management practice to manage capital structure. Useful for different categories of professionals are approaches to the analysis of capital structure, the results of the analysis of the causes of change, the study on trends and their consequences for homogeneous enterprises.

Capital Structure as a Criterion of Efficient Management of the Corporation's Financial Recourses

“…Considering the approaches to the capital structure optimisation of enterprises, which are used in Ukrainian practice, we note that they are based on elements that are substantiated by foreign practice and take into account the peculiarities of the internal and external environment of the functioning of companies. The economists focus on the optimal capital structure, which ensures the most effective proportionality between ROE and financial stability and ensures the maximization of the company's value (Blank, 2000), the minimization of the WACC is ensured and optimal financial stability (Prymostka, 2017; Drobot & Tucha, 2019; Kuznyetsova, Kozmuk and Levchenko, 2017; Rohanova & Kotliarova, 2021) and the maximum value of the company is observed (Tereshchenko, 2000), the optimal capital structure is formed based on the assessment of external risks (Bagatska et al, 2021) and the company's financial security is ensured based on WACC, liquidity and financial stability (Drobot & Korniyenko, 2022).…”

Analysis of the Degree of Influence of External Unfairness of Executive Compensation on the Stability of Corporate Management Teams

“…As the overall age of the team increases, their own experience and work experience are richer and more sensitive to the changes in the enterprise's business environment, as well as the integration and utilization of resources are stronger, which helps to improve enterprise performance. In the literature [12], it is stated that the capital structure of enterprises is optimally managed by algorithms that can assess, analyze and predict changes in the capital structure of homogeneous groups of enterprises. The research uses scientific observation and comparison, analysis and synthesis, induction and deduction, and abstraction to determine the essential features of managing capital structure.…”