THE INFLUENCE OF INDEBTEDNESS DEGREE ON COMPANIES' PERFORMANCES IN WHOLESALE TRADE

Florina Mocanu
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Florina Mocanu: "Valahia" University of Targoviste

Theoretical and Applied Economics, 2009, vol. 05(534)(supplement), issue 05(534)(supplement), 256-260

Abstract: In the current economy, the recourse to additional funding with a fair cost tends to differentiate companies in competition. The use of borrowed capital in a greater proportion determines the augmentation of degree of risk of the companies' profits and also a rate of return estimated at a superior value. An optimal structure of capital will maximize the enterprise's value by achieving a balance between the assumed degree of risk and the estimated rate of return. The results of this study highlight the correlation between the wholesale trade companies' indebtedness degree modification, and their performance – reflected by the ROA and the ROE indicators.

Keywords: performance; value creation; capital structure; return on assets; return on equity. (search for similar items in EconPapers)
Date: 2009
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