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

Kód výsledku v IS VaVaI

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Nalezeny alternativní kódy

RIV/75081431:_____/16:00000994

Výsledek na webu

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DOI - Digital Object Identifier

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Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

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

Popis výsledku anglicky

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.

Druh

D - Stať ve sborníku

CEP obor

AE - Řízení, správa a administrativa

OECD FORD obor

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Projekt

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Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2016

Kód důvěrnosti údajů

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

Název statě ve sborníku

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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Počet stran výsledku

8

Strana od-do

1696-1703

Název nakladatele

GEORG, Bajzova 11, 010 01 Zilina, Slovak Republic

Místo vydání

Žilina

Místo konání akce

Rajecke Teplice

Datum konání akce

5. 10. 2016

Typ akce podle státní příslušnosti

WRD - Celosvětová akce

Kód UT WoS článku

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