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Capital structure of small and medium enterprises

V. Grinchenko

Economy and Forecasting, 2016, issue 1, 142-156

Abstract: The article analyzes the results of a research on the capital structure of small and medium business and identifies the financing peculiarities of Ukrainian and European enterprises. The author calculates the financial leverage of Ukrainian companies and shows that Ukrainian SMEs have higher level of financial leverage and risk compared with large enterprises. Structure of equity and debt financing was analyzed. It was determined that small and medium enterprises have a higher proportion of authorized capital in the structure of financial resources due to the lower possibility of attracting debt financing. The high level of retained losses of Ukrainian small and medium enterprises demonstrates the failure to finance their activities from internal sources, as well as a higher probability of bankruptcy. The author analyzed the debt structure of Ukrainian firms and revealed a significant prevalence of short-term debt in the debt structure of enterprises of all sizes due to intensive usage of trade credit. At the same time, it was found that a high level of financial leverage of European SMEs was mainly caused by intensive usage of bank lending, but not accounts payable. It was identified that the capital structure of SMEs in Italy, Portugal and Slovakia are similar to Ukrainian enterprises.

Date: 2016
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