Influence of various factors on the choice of enterprise financing sources in the conditions of stagnation

Abstract

The authors indicate that the choice of the enterprise financial activity sources is influenced by various factors. When analyzing the financial stability of the company, special attention should be paid to the established ratio between own and borrowed sources of funding. The world accounting and analytical practice stipulates that the optimal ratio between equity and borrowed capital must be 50/50% or 60/40%. According to the authors, in choosing the optimal capital structure that maximizes the economic profitability, it is necessary to give preference to the specific weight of borrowed capital equal or close to 30–40% of the value of assets. The risk of losing the enterprise due to debts should be kept in mind, and this is a very important factor. The article notes that the influence of factors can weaken or intensify depending on the state of the economy. The authors emphasize that the choice of entrepreneurial activity financing sources is especially important during the time of stagnation of the economy, when the economy development , free access to financial markets are restrained. Effective management of enterprise financial sources , according to the authors, presents a continuous process of adaptation to changing market conditions, tax laws, competition forces. The decision to choose the source of funding should be a part of a sound financing strategy, which takes into account the market position of the enterprise, future investment opportunities, expected cash flows, dividend policy, funding needs and other factors. The company plans to attract funding sources should be combined with a predictive risk of assessments, the enterprise’s profit and balance sheet liquidity.