The Factors that Determine the Capital Structure of Domestic Enterprises in Changing Economic Conditions

Abstract

The article is aimed at researching the factors influencing the capital structure of domestic enterprises in the current economic environment. The existing scientific approaches to the definition of factors that determine the structure of capital are generalized, and on this basis it is clarified which of them now take place in the formation of sources of financing in domestic enterprises, including through analysis of statistical information on the capital structure of enterprises of Ukraine. Specific factors influencing the capital structure of domestic enterprises in terms of external and domestic, manufacturing, economic and organizational activities are provided. Given the changing economic conditions, domestic enterprises need to pay special attention to internal factors, as the influence on external factors and the legislative restrictions on the formation of financial resources of Ukrainian enterprises on the part of enterprises is limited. The main factors that can be influenced by an enterprise, and which significantly affect the ratio between different sources of financial resources, are: dividend policy, the mentality of owners and managers, use of production capacities, level of forecasting and the capability to respond quickly to external threats and challenges. Domestic enterprises should form a capital structure depending on the type of economic activity, organizational-legal form, and changing conditions of Ukrainian economy, constantly monitoring changes in these factors and making adjustments in the implementation of activities. It is worth looking for a compromise between profitability and riskiness, choosing the optimal ratio between own and borrowed capital, promptly responding to the existing challenges.

Keywords

• capital structure
• optimization of capital structure
• liabilities of ukrainian economic entities
• profitability
• risk