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The Role of Capital Structure in Company’s Financing

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  • Nicoleta BARBUTA-MISU

    (Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, Romania)

  • Mihaela-Felicia BODEA

Abstract

The changes in capital structure and in financial components of a company have a particular importance in choosing optimal financing decision, in determining the impact of changes in capital structure and of elements within balance sheet. To quantify such an impact in the literature have been considered many factors as debt-equity ratio, profitability, self financing capacity and the ability to earn profit. Using the comparative method over a period of three years to five companies acting in the metallurgical sector in this paper has been analyzed the evolution of debt capacity ratio, return on equity ratio, financial long term debt ratio, interest coverage ratio and long-term financial autonomy ratio. Based on these findings it was concluded that the variation of capital structure and performance of the companies affects and influences funding arrangements considered by the companies’ managers

Suggested Citation

  • Nicoleta BARBUTA-MISU & Mihaela-Felicia BODEA, 2014. "The Role of Capital Structure in Company’s Financing," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 26-32.
    • Handle: RePEc:ddj:fseeai:y:2014:i:3:p:36-32
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    References listed on IDEAS

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