SHS Web Conf.
Volume 129, 2021The 21st International Scientific Conference Globalization and its Socio-Economic Consequences 2021
|Number of page(s)||11|
|Section||Financial Management and Financial Markets|
|Published online||16 December 2021|
The impact of debt management on corporate earnings: Indebtedness and its effects on the financial performance of selected Visegrad group enterprises
University of Zilina, Faculty of Operation and Economics of Transport and Communications, Univerzitna 1, 010 26 Zilina, Slovakia
* Corresponding author: email@example.com
Research background: One of the significant problems of corporate financial management in the international context is the appropriate determination of the total amount of capital as well as the correct composition of financial sources to finance the activities of enterprises. The determination of the optimal capital structure, and thus the minimization of the costs of capital have been of interest to authors worldwide for several decades, as they can significantly influence the level of corporate earnings.
Purpose of the article: The main aim of the paper is to find a mathematical formula to determine whether the indebtedness of an enterprise is related to any financial problems or does not affect the financial performance of an enterprise and thus contributes to the profitability, i.e. if the debt management is performed efficiently.
Methods: To find the mathematical formula, we used the financial data of enterprises operating in the selected Visegrad group and calculated the financial ratios of indebtedness, which were further used in the multiple discriminant analysis. The final discriminant function and calculated centroids allow dividing the enterprises into two different groups, with and without financial problems.
Findings & Value added: The results of this analysis can be used in the international context to determine the appropriate level of indebtedness also in other countries, not only in the Visegrad group, which may be helpful for corporate financial managers or creditors, because optimal indebtedness helps generate revenues.
Key words: debt management; / earnings management; / globalization; / Visegrad countries
© The Authors, published by EDP Sciences, 2021
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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