Abstract
The aim of the paper was to investigate the impact of company's capital structure on its performance. To achieve the goal, the data of Slovak businesses were used. An input analysis of the capital structure of the selected sector was carried out in order to generalize and elaborate conclusions aimed at the capital structure of the businesses analysed. Selected indicators of capital structure were calculated to analyse the relationships between these indicators and business performance. The results of the correlation analysis were complemented by examining the impact of selected independent variables on business performance applying regression analysis and Principal Component Analysis. Based on the findings, capital structure model was formulated to quantify the impact of changes in capital structure on business performance. The contribution of the paper is the identification of capital structure indicators that affect business performance as well as the construction of capital structure model. The article as well as the research, which is the basis for paper elaboration, is the result of professional public interest focused on finding whether the capital structure is the determinant of business performance.
Highlights
Business performance measurement is a highly current issue
When constructing different regression models, we found out that the impact of capital structure on performance is determined by the way performance is calculated
This can be explained by the fact that individual inputs of Build-up model are influenced by business capital structure
Summary
Business performance measurement is a highly current issue. They differentiate based on the area of financial health that they prefer. We focus on measuring the impact of capital structure on business performance. Performance is measured by the level of profit in the case we proceed from business ability to appreciate available resources (Veber, 2004; Fibírová and Šoljaková, 2005; Sedláček, Suchánek and Špalek, 2012). Neumaierová and Neumaier (2002); Frost (2005); Šulák and Vacík (2005) are among the authors who understand the performance as the enterprise’s ability to capitalize its investments embedded into business in the best way According to Wagner (2009), the performance of an enterprise is a characteristic that describes the way in which an enterprise carries out a certain activity similar to the way in which this activity is performed. Neumaierová and Neumaier (2002); Frost (2005); Šulák and Vacík (2005) are among the authors who understand the performance as the enterprise’s ability to capitalize its investments embedded into business in the best way
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