Capital Structure Modelling and Analysis of its Impact on Business Performance

Abstract

The aim of the paper was to investigate the impact of company's capital structure on its performance. To achieve the goal, the data of Slovak businesses were used. An input analysis of the capital structure of the selected sector was carried out in order to generalize and elaborate conclusions aimed at the capital structure of the businesses analysed. Selected indicators of capital structure were calculated to analyse the relationships between these indicators and business performance. The results of the correlation analysis were complemented by examining the impact of selected independent variables on business performance applying regression analysis and Principal Component Analysis. Based on the findings, capital structure model was formulated to quantify the impact of changes in capital structure on business performance. The contribution of the paper is the identification of capital structure indicators that affect business performance as well as the construction of capital structure model. The article as well as the research, which is the basis for paper elaboration, is the result of professional public interest focused on finding whether the capital structure is the determinant of business performance.