APPROACH TO THE ANALYSIS OF THE ENTERPRISE’S CAPITAL STRUCTURE

Abstract

The capital of an enterprise is defined as a common value expression of funds invested in the specific property forms. In its nature, the capital is the passive manifestation of value. It is the source of funding of the enterprise’s property. The property itself is the active manifestation of value. The capital and the property of the enterprise are two different interrelated expressions of the value.The question of enterprise’s capital structure is topical at all stages of the development of such enterprise.Knowledge about the capital structure and its analysis are useful for the business practice to different extent.The information with regard to the capital structure is useful for the financial management, for the enterprise’s management in general, for the governance of its business in operative and strategic aspect. We should note that the ratios between own funds and borrowing sources as well as the duration of capital participation in the business turnover of the enterprise form both the amounts of different groups and types of assets as well as the property structure of the enterprise.Owners and potential capital investors are to certain extent interested in the information about the enterprise’s financial performance for several subsequent periods as well as about the return of the funds they have invested in its business.Suppliers, creditors, governmental institutions and other external stakeholders need information about the financial performance, the financial position, the liquidity and the solvency of the enterprise.Enterprise’s capital structure is in the foundation of the above matters and of a number of other important matters in the business practice. Such structure is defined by means of the relative shares of different types of specific elements of the capital in the aggregate capital invested by the enterprise.This publication studies the indicators for analysis of the capital structure, and its subject matter is the methodology for analysis of the enterprise’s capital structure.The methods of scientific knowledge are applied for the analysis and evaluation of the enterprise’s capital structure. On this basis, the methodology for analysis of the enterprise’s capital structure is defined as a system of subsequently implemented stages that comprise analysis of the general structure of the capital, analysis of the structure of equity, and analysis of the structure of borrowings. Thus, we achieve the objective of the publication to determine a methodology for analysis and evaluation of the enterprise’s capital structure that is theoretically justified, applicable and useful for the business practice.