The Ideal Debt Ratio of an Agricultural Enterprise

Jiří Kučera, Marek Vochozka and Zuzana Rowland
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Jiří Kučera: The Faculty of Operation and Economics of Transport and Communications, Department of Economics, University of Žilina, Univerzitná 8215/1, 01026 Žilina, Slovakia
Marek Vochozka: School of Expertness and Valuation, Institute of Technology and Business in České Budějovice, Okružní 517/10, 370 01 České Budějovice, Czech Republic
Zuzana Rowland: School of Expertness and Valuation, Institute of Technology and Business in České Budějovice, Okružní 517/10, 370 01 České Budějovice, Czech Republic

Sustainability, 2021, vol. 13, issue 9, 1-17

Abstract: The objective of the contribution is to propose a new methodology for determining the optimal credit absorption capacity of an enterprise while maintaining the positive function of financial leverage, i.e., the maximum possible loan that would continuously bring benefit to the enterprise. The proposed methodology determines the credit absorption capacity of an enterprise according to EVA Equity and EVA Entity. Based on a theoretical analysis of both indicators, the possibility of applying the proposed methodology for this purpose was proved. To verify the theoretical assumptions, the optimal credit absorption capacity of enterprises operating in the agricultural sector of the CR was determined. The data used for the purposes of the contribution were obtained from the Albertina database for the years 2012–2018. The credit absorption capacity of the monitored enterprises ranged from CZK 6.88 million to CZK 9.6 million. The article also determines the optimal ratio of equity to debt capital.

Keywords: EVA Equity; EVA Entity; credit absorption; financial leverage; debt ratio (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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