Connection-analyse of capital structure and profitability by agricultural enterpri

Herczeg, Adrienn

Keywords: business partnerships, capital structure, profitability, profit/loss

The analysis of capital system of agricultural corporations is a key issue in economics. Its fluctuation have noticeable effect on various fields of the life of corporations and affect competitiveness and profitable production. The aim of this study is to reveal the connection between capital system and profitability as well as to analyse changes of profitability indexes which play a role in developing the capital system. Regression analysis of the profitability indexes proved that the capital structure had a significant effect on profitability. A maximum rate of capital leverage is identified (by activity and size) enterprises) – rates higher than this are a sign that the enterprise is making a loss. It was concluded that competitiveness cannot be achieved without defining the optimal capital structure. The first step in this direction should be to strengthen own capital funds, primarily by restoring the ability to produce revenue. This way the profit for the year - as an element of own capital - can be used for the operation and financing of the enterprise. Careful setting of the ratio of foreign and own capital should be followed by ensuring that debt liabilities are dominated by long-term foreign capital. Regarding the credit structuring, it must be pointed out that while a low level of indebtedness reduces operational risks, it also means that most of the farms have to key production to their self-financing capabilities.

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