ANALYSIS OF THE FINANCIAL LEVERAGE EFFECT OF A MANUFACTURING ENTERPRISE

Abstract

The study's relevance is determined by the complex nature of the impact of borrowed funds on capital, which creates a need for a flexible and well-considered approach to managing financial resources. In particular, it is important to consider the balance between the potential increase in profit from borrowing funds and the rise in financial risks, which allows the enterprise to optimize the capital structure and ensure a balance between profitability and financial stability. In this context, a systematic study of the classical financial leverage mechanism plays an important role, enabling the analysis and planning of the volumes of equity and borrowed capital, considering the expected increase in profit. The study proves that using borrowed capital is a powerful tool that can impact the financial results of a manufacturing enterprise. However, its use is associated with certain risks. It is important to systematically analyze its impact and make informed decisions regarding the capital structure, considering the integrated effect of financial leverage.

Keywords

• profitability
• equity capital
• financial resources
• analysis
• financial leverage mechanism