Financial leverage in manufacturing industry in Czech Republic
| Autor: | Denisa Vecernikova, Jakub Horák, Tomas Krulicky |
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| Rok vydání: | 2020 |
| Předmět: | |
| Zdroj: | Vestnik of Astrakhan State Technical University. Series: Economics. 2020:81-88 |
| ISSN: | 2309-9798 2073-5537 |
| DOI: | 10.24143/2073-5537-2020-2-81-88 |
| Popis: | The paper is focused on the problem of ffinancial leverage that assumes a high risk of possible incremental losses as well as it is a means to achieve higher profits dictating the urgency of the problem and the need to find the solution. The company’s performance is influenced by several factors that need to be taken into account and evaluated according to the ratio of assets (the way to obtain the return on assets). These factors include risks, return on equity and financial stability. Determining the appropriate amount of financial leverage is quite difficult. It depends not only on the time interval and level of preparation for risk, but also on the size of equity and the degree of success of recent transactions. Financial leverage can have a huge impact, because it creates both the risk of increased potential losses and the possibility of gaining a higher profit. There has been presented the answer to a scientific question, whether the foreign capital was efficiently used in the manufacturing industry in 2012-2018. There have been illustrated the data from financial statements from the manufacturing industry in the Czech Republic during the period from 2012 to 2018. The data were processed in Excel. Mean values of ROE, ROA and ROCE indicators are cal-culated for individual years. There have been calculated the values of indebtedness of every year; they are compared with the average profit in separate years. The proportion of foreign resources and overall assets has been analysed, the indebtedness was calculated and the inventory of using the foreign capital in 2012-2018 was made. It was found out that comparing to 2012, the indebtedness has grown, which supposes a considerable growth in the coming years. The indebtedness has been found not necessary to exceed 1. Alternatively, it is recommended to maintain the average value of the foreign capital on the same or slightly lower level in order to check the average indebtedness at 0.5, because this value illustrates comparatively positive results of average profit values. |
| Databáze: | OpenAIRE |
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