Abstract
Issues related to the formation and optimization of the capital structure are an important component of the company's financial management system. The effectiveness of decisions depends on external and internal factors that affect the financial activities of the company, including financial risk. The article reveals the concept of financial risk and assesses its role in the analysis of the relationship between the capital structure and profitability indicators. It is established that the negative impact of the level of debt in the capital structure on the return on assets weakens as the financial risk increases, measured in terms of current liquidity coefficients and interest coverage. An increase in the debt burden leads to an increase in the return on equity when the company has enough funds to service the debt and the revenue variation is at an average level.
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