Optimization of a Company's Capital Structure: Global Problem of the Corporate Finance andits Possible Solutions

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F60076658%3A12510%2F16%3A43891780" target="_blank" >RIV/60076658:12510/16:43891780 - isvavai.cz</a>

Alternative codes found

RIV/75081431:_____/16:00000994

Result on the web

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DOI - Digital Object Identifier

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Result language

angličtina

Original language name

Optimization of a Company's Capital Structure: Global Problem of the Corporate Finance andits Possible Solutions

Original language description

The influence of a capital structure on the profitability of a company is really significant. A company has to pay for using capital especially in two forms, i.e. in the form of interests (for debts) and dividends (for use of equity). The costs determine the size of profit or loss of the company. That is why all the companies try to minimize the costs paid for using the capital. There are several possibilities to optimize the capital structure. This contribution uses WACC (Weighted Average Cost of Capital). It really focuses on the two parts of capital - debt and equity. We know the price for using debt and equity. However, the rate of equity and rate of debt change according to the size of the company's debt. The general truth is that if debt grows the rate of debt grows and rate of equity also grows. The investors suppose higher profit for higher risk. On the other hand, it is necessary to point out that the relation of the development of debt, rate of debt and rate of equity is not linear. The main objective of the paper is to predict the rate of debt and rate of equity according to the proportion of debt in the case of a specific company. The artificial neural networks are used for setting a regression model, concretely multi-layer perceptron neural networks and radial basis function neural networks. The results are in the shape of two curves. In both cases the independent value is the size of debt. The independent values are rate of debt and rate of equity.

Czech name

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Czech description

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Type

D - Article in proceedings

CEP classification

AE - Management, administration and clerical work

OECD FORD branch

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Project

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Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2016

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection

GLOBALIZATION AND ITS SOCIO-ECONOMIC CONSEQUENCES 16th International Scientific Conference

ISBN

978-80-8154-191-9

ISSN

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e-ISSN

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Number of pages

8

Pages from-to

1696-1703

Publisher name

GEORG, Bajzova 11, 010 01 Zilina, Slovak Republic

Place of publication

Žilina

Event location

Rajecke Teplice

Event date

Oct 5, 2016

Type of event by nationality

WRD - Celosvětová akce

UT code for WoS article

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