INPROFORUM 2011

Degree of financial leverage
Marie Vejsadová Dryjová

Language: cs
Last modified: 2013-07-30

Abstract


Financing of foreign capital enables enterprises to larger and more dynamic development, thus contributing to the creation of corporate profits. In addition, the use of debt financing can lead to an increase in return on equity - the effect is known as financial leverage. The effect of the financial leverage was evaluated as very poor with the help of a simple regression analysis of degree of the financial leverage and indebtedness on a selective sample of 90 domestic agricultural enterprises. The main causes of poor financial leverage effect are marked as follows - decreasing debt, subsidies, agriculture sector and structure of foreign sources. Further differentiation by the static model and dynamic model of the degree of the financial leverage was tested through of assumptions: There is a statistically significant difference between the models static and dynamic of the degree of the financial leverage. Statistically significant difference between static and dynamic model of the degree of the financial leverage has been confirmed only in 2005.


Keywords


Financial leverage, degree of financial leverage, indebtedness, earnings before interest and taxes, return on equity

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