What is financial leverage definition.

Are you here: The effect of financial leverage., Possibility of obtaining economic mechanisms , underlying. Correctness of calculation in modern conditions of Russia (hypothetical option and specific practice). The effect of financial leverage: a view from an entrepreneur and a banker. Two options for calculating the EFR, determining the average calculated interest rate in conditions of inflation. Differential, financial leverage (economic meaning and practical significance

). The role of accounts payable in calculating the conditions for a specific loan (short-term and long-term periods). A modern company operating in market conditions , professes the philosophy of comparing results and costs when the first exceeds the second as the most important condition own existence. Another form of manifestation of the main philosophical postulate activities of the company is to increase efficiency (production, commercial, financial activities ). Consequently, the company is interested in increasing the economic return on assets and profitability own funds (RSS). The latter is the ratio of NREI to own assets . Economically, RCC is the efficiency of a company's use of its own funds. It is not difficult to calculate this value in accounting (we have already received the NREI, but we take our own funds from the balance sheet of the enterprise (do not forget that we're talking about about own funds for certain period

!)). Next, we will dwell in more detail on the role of the RSS in the activities of the company. It has been noticed that a company that rationally uses borrowed funds and, despite their paid nature, has more high profitability own funds. This can be explained based on functioning of the company. Let's look at a simple example. We have two enterprises. The first has an asset (A) of 200, a liability (P) - the same 200, and all funds are its own. The second enterprise A also has 200, but its liabilities include 100 of its own and 100 of borrowed funds (in the form of bank loans). NREI (for simplicity) is the same for both enterprises - 50. The introduction of income taxes into the analysis does not change anything for our enterprises, since taxes need to be paid, and from the same value of NREI they will also be the same. Therefore, we will refuse taxes (abstract from them). The first enterprise has a PCC of 50: 200 = 0.25 (25%). Another company must pay interest on the loan, only after that we can determine the RSS. Let interest rate equal to 10% per annum. Consequently, when calculating the RCC, the second enterprise will have the following figures: (50 - 10) / 100 = 0.4 (40%). Thus, the RCC of the second enterprise will be higher(although it does use borrowed funds). This is because ER>interest rates (25% and 10% respectively). This phenomenon is called leverage effect. Consequently, the effect of financial leverage (EFF) is the increase in the profitability of equity obtained by using borrowed funds, provided that the economic profitability of the company's assets is greater than the interest rate on the loan.

It can be argued that

RSS = ER + EGF or EFR = RSS - ER (4)

It should be noted that when calculating ER and RSS, income tax payments must be taken into account. At the same time, the values ​​of ER and RSS will decrease, and the EFR will be adjusted to the amount of income tax. Readers are invited to calculate for themselves. corresponding values and make sure that what is said is correct.

As noted earlier, EGF exists (with positive sign) only because the economic return on assets is greater than the interest rate. In our example, we were talking about one loan, so we did not focus on this side of the problem. In reality, the company regularly resorts to bank loans, and the rate of interest it pays varies from one loan transaction to another. Therefore, we should not talk about the interest rate as such, but about the average calculated interest rate (ASIR):

In both the numerator and the denominator we have values ​​for a certain period, which are calculated as chronological average values. The resulting figures will differ from the conditions of each specific transaction (if the indicator is calculated for the year, then both the costs of loans and the amount of loans received should be spread over the year). It may seem that we are dealing with some convention, but if the enterprise regularly (and this is the rule) resorts to bank loans, then the proposed calculation of the MTSP is quite correct. This is also true for cases when a company uses a loan for the first time. If loans “go beyond” the time interval, then the approach should be the same, since we must calculate the EFR for certain period (short-term, quarter, month, year). It should be noted that in order to determine the SISP, the financial manager must familiarize himself with the terms of all credit transactions concluded in a given period, as well as those credit transactions, payments for which fall during this period.

Now it is necessary to transform the formula that determines the effect of financial leverage:

where ZS - borrowed funds, SS - own funds, NNP - income tax.

Or in another form:

It is fundamentally important to present the effect of financial leverage in the form of a product of two multipliers, since in this case we will be able to determine by what means the EFR can be increased (due to the difference between ER and SRSP or due to the ratio of borrowed and equity funds).

It should be noted that the role of the differential and the shoulder in regulating EGF is different. It is advisable to increase the EGF differential. This will make it possible to increase the RCC either by increasing the economic profitability of assets, or by reducing the CPSP (if the first is in the hands of the entrepreneur himself, then the second is in the hands of the creditor-banker). This means that an entrepreneur can influence the differential only through ER (and such influence is not unlimited). It should also be noted that the differential value gives a very important information to the seller of borrowed funds - the banker. If the value of the differential is close to zero or negative, then the banker refrains from new loans or sharply increases their price, which affects the value of the MTSP.

As for the EGF leverage, its increase beyond a certain limit seems simply destructive for the entrepreneur and the company. A significant amount of leverage sharply increases the risk of non-repayment of loans, and therefore makes it difficult to obtain new loans.

All this is clearly depicted in Fig. 5

Rice. 5. Graphic representation of the possibility of raising borrowed funds by a company (the area of ​​​​the optimal ratio of borrowed and equity funds is shaded)

Now we can formulate some rules related to the effect of financial leverage.

1. The EGF differential must be positive. An entrepreneur has certain leverage over the differential, but such influence is limited by the ability to increase production efficiency.

2. The financial leverage differential is an important information impulse not only for the entrepreneur, but also for the banker, since it allows one to determine the level (measure) of the risk of providing new loans to the entrepreneur. The larger the differential, the lower the risk for the banker, and vice versa.

3. Financial leverage carries fundamental information for both the entrepreneur and the banker. Large leverage means significant risk for both participants in the economic process.

Thus, we can argue that the effect of financial leverage allows us to determine both the possibility of attracting borrowed funds to increase the profitability of equity capital, and the associated financial risk (for the entrepreneur and the banker).

The rules formulated above allow the company to specifically solve the problem of determining the amount of possible attraction of loans and borrowings (in the short term and to solve current problems firms).

Let's try to look at a specific example.

Let's take two enterprises A and B.

Asset (without accounts payable)
	50 SS + 50 GS	35 SS + 15 GS
Financial costs
Income tax

Which enterprise can take out a loan and in what amount for the current modernization of production?

ER´ (1-NNP)
RSS´ (1-NNP)
Lever arm
	There is a big risk, you can’t take out a loan	There is a moderate risk, the company can take out a loan at ER = 1.5 MTSP

It should be noted that there are optimal values ​​for the EGF and the lever arm. This EGF value is shown in Fig. 5 between the values ​​of 1/2 and 1/3 of the RSS (the figure was obtained based on a study of empirical material on well-functioning Western corporations).

The rational value of the lever arm in the West is 0.67. It seems that this figure is not suitable for Russian practice, since in conditions of high inflation it tends to increase due to the acceleration of money turnover (increasing its speed). It can be said that for Russian companies V modern conditions the optimal value is within 1.5.

For our task, we take the ratio of EGF and RSS equal to 1/3, and the optimal value of the lever arm is 1.5.

We find that the second company can attract an additional loan in the amount of (35x1.5)-15=37.5.

There is another calculation method related to the effect of financial leverage. This is the definition impact forces financial leverage (FL):

(8)

where BP - book profit, ChPA - net profit per ordinary share.

One important note: financial costs and interest on a loan are different economic phenomena. The first is broader, as it includes not only the payment of interest, but also the repayment of current debt.

The magnitude of the impact of financial leverage quite accurately shows the degree of financial risk associated with the company. How more strength the impact of financial leverage, the greater the risk associated with the enterprise, the risk of non-repayment of the loan to the bank and the risk of a decline in the stock price and a drop in the dividend on them.

Previous

Financial leverage

The effect of financial leverage shows by what percentage the return on equity increases due to the attraction of borrowed funds.

The effect of financial leverage occurs due to the difference (differential) between return on assets and the cost of borrowed funds. The differential must not be negative.

The differential reflects the lender's risk: the larger the differential, the lower the risk.

Financial leverage

Effect of financial leverage: the use of debt, all other things being equal, leads to the fact that growth in earnings before interest and taxes leads to stronger growth in earnings per share.

Knowledge of the mechanism of influence of financial leverage on the level of profitability of equity capital and the level of financial risk allows you to purposefully manage both the cost and capital structure of the enterprise.

FL makes it possible to take advantage of the “tax shield”:

Unlike dividends on shares, the amount of interest on the loan is deducted from the total profit subject to taxation.

Financial leverage

The effect of financial leverage is also calculated taking into account the effects of inflation (debts and interest on them are not indexed).

As the inflation rate increases, the fee for using borrowed funds becomes lower (interest rates are fixed) and the result from their use is higher.

If interest rates are high or the return on assets is low, financial leverage begins to work against the owners.

Financial leverage reflects the degree of dependence of the enterprise on creditors, that is, the magnitude of the risk of loss of solvency.

Financial leverage:

Financial leverage ratio(financial leverage) is defined as the ratio of debt capital to equity capital (based on market valuation of assets).

The effect of financial leverage is also calculated:

EGF = (1 - Kn)*(ROA - Tsk) * ZK/SK.

where ROA is the return on total capital before taxes (the ratio of gross profit to the average value of assets), %;

SK - average annual amount of equity capital;

Кн - taxation coefficient, in the form of a decimal fraction;

Tsk - weighted average price of borrowed capital, %;

ZK - average annual amount of borrowed capital.

Financial leverage:

The formula for calculating the effect of financial leverage contains three factors:

(1 - Kn) - does not depend on the enterprise.

(ROA - Tsk) - the difference between return on assets and the interest rate for the loan. It is called differential (D).

(ZK/SC) - financial leverage (FL).

Optimal, especially in Russian practice, the financial leverage ratio is considered equal to 1.

A value of up to 2 may be acceptable (for large public companies this ratio may be even higher).

At large values ​​of the coefficient, the organization loses its financial independence, and its financial position becomes extremely unstable.

The most common ratio in developed economies is 1.5 (i.e. 60% debt and 40% equity).

Example:

№ p/p	Indicators	Enterprises
	Average amount of capital (assets), of which:
	Average net worth
	Average amount of borrowed capital
	Gross profit amount (excl. interest accounting)
	Coeff.
	return on assets (excluding interest), %
	Average interest rate for a loan, %
	Amount of interest (gr. 3 × gr. 6 / 100)
	Gross profit including interest (gr. 4 - gr. 7)
	Income tax rate,
	Amount of income tax (column 8 × column 9)
	Net profit (gr. 8 - gr. 10)
	Coeff.

Example: IC profitability, % (group 11 × 100 / group 2)

Increase in the profitability of the insurance company due to the use of borrowed capital, in% (relative to the previous A)

Formation of the effect of financial leverage

For enterprise A, there is no effect of financial leverage, since it does not use borrowed capital in its activities.

For enterprise B this effect is:

EFL = (1 - 0.2) × (20-10) × (200 / 800) = 2

Financial leverage

For enterprise B this effect is:

The financial leverage differential is the main condition that forms its positive effect, which manifests itself only if gross profit level, generated by the assets of the enterprise, exceeds the average size percent for the loan used (including not only its direct rate, but also other specific costs for its attraction, insurance and servicing).

 The higher the positive value of the financial leverage differential, the higher, other things being equal, its effect will be.

Financial leverage:

Financial leverage and operating leverage are similar methods.

FL also increases semi-fixed costs in the form of interest payments on a loan, but since creditors do not participate in the distribution of company income, variable costs are reduced.

 growing financial leverage has a dual impact:

more operating income is required to cover fixed financial costs

When cost recovery is achieved, profits begin to grow faster with each unit of additional operating income.

Financial leverage:

Operating leverage shows the dynamics of operating profit in response to changes in company revenue

Financial leverage characterizes the change in profit before tax after paying interest on loans and borrowings in response to a change operating profit.

Total leverage gives you an idea of ​​how much profit before taxes after interest will change if revenue changes by 1%.

Total leverage = OL x FL

This indicator will allow you to determine by what percentage net profit will change when sales volume changes by 1%.

Financial leverage:

Production and financial risks multiply and form the total risk of the enterprise.

 financial and operational leverage (potentially effective) can be dangerous due to the risks they contain.

The challenge of financial management is to balance these two elements.

 Low operating leverage can be enhanced by raising debt capital.

 High operating leverage can be offset by low financial leverage.

Financial leverage:

The financing rule is based on the leverage effect:

if attracting additional borrowed funds gives a positive effect of financial leverage, then such borrowing is profitable,

but at the same time it is necessary to monitor the differential, since with an increase in financial leverage, lenders tend to compensate for their risk by increasing the loan rate.

Financial leverage characterizes the ratio of all assets to equity, and the effect of financial leverage is calculated accordingly by multiplying it by the indicator of economic profitability, that is, it characterizes the return on equity (the ratio of profit to equity).

The effect of financial leverage is an increase in the profitability of equity capital obtained through the use of a loan, despite the payment of the latter.

An enterprise using only its own funds limits its profitability to approximately two-thirds of economic profitability.

РСС – net return on equity;

ER – economic profitability.

An enterprise using a loan increases or decreases the profitability of its own funds, depending on the ratio of its own and borrowed funds in liabilities and on the interest rate. Then the financial leverage effect (FLE) arises:

(3)

Let's consider the mechanism of financial leverage. The mechanism includes differential and leverage.

Differential is the difference between the economic return on assets and the average calculated interest rate (ASRP) on borrowed funds.

Due to taxation, unfortunately, only two thirds remain of the differential (1/3 is the profit tax rate).

Leverage of financial leverage – characterizes the strength of the influence of financial leverage.

(4)

Let's combine both components of the financial leverage effect and get:

(5)

(6)

Thus, the first way to calculate the level of financial leverage effect is:

(7)

The loan should lead to an increase in financial leverage. In the absence of such an increase, it is better not to take out a loan at all, or at least calculate the maximum maximum amount of loan that leads to growth.

If the loan rate is higher than the level of economic profitability of the tourism enterprise, then increasing the volume of production due to this loan will not lead to the repayment of the loan, but to the transformation of the enterprise’s activities from profitable to unprofitable.

Here we should highlight two important rules:

1. If new borrowing brings the enterprise an increase in the level of financial leverage effect, then such borrowing is profitable. But at the same time, it is necessary to monitor the state of the differential: when increasing the leverage of financial leverage, the banker is inclined to compensate for the increase in his risk by increasing the price of his “product” - a loan.

2. The lender’s risk is expressed by the value of the differential: the larger the differential, the lower the risk; the smaller the differential, the greater the risk.

You should not increase your financial leverage at any cost; you need to adjust it depending on the differential. The differential must not be negative. And the effect of financial leverage in world practice should be equal to 0.3 - 0.5 of the level of economic return on assets.

Financial leverage allows you to assess the impact of an enterprise's capital structure on profit. Calculation this indicator It is appropriate from the point of view of assessing the effectiveness of past and planning future financial activities of the enterprise.

Advantage rational use financial leverage is the ability to generate income from the use of capital borrowed at a fixed interest rate in investment activities that generate a higher interest rate than the one paid. In practice, the value of financial leverage is influenced by the field of activity of the enterprise, legal and credit restrictions and so on. Too high a value of financial leverage is dangerous for shareholders, as it is associated with a significant amount of risk.

Business risk means uncertainty about possible result, the uncertainty of this activity result. Let us remind you that risks are divided into two types: pure and speculative.

Financial risks are speculative risks. An investor, making a venture capital investment, knows in advance that only two types of results are possible for him: income or loss. A feature of financial risk is the likelihood of damage as a result of any operations in the financial, credit and exchange spheres, transactions with stock securities, that is, the risk that arises from the nature of these operations. Financial risks include credit risk, interest rate risk, currency risk, risk of lost financial profit.

The concept of financial risk is closely related to the category of financial leverage. Financial risk is the risk associated with a possible lack of funds to pay interest on long-term loans. An increase in financial leverage is accompanied by an increase in riskiness of this enterprise. This is manifested in the fact that for two tourism enterprises having the same production volume, but different level financial leverage, the variation in net profit due to changes in production volume will be different - it will be greater for an enterprise that has a higher level of financial leverage.

The effect of financial leverage can also be interpreted as the change in net profit per each ordinary share (as a percentage) generated by a given change in the net result of operating an investment (also as a percentage). This perception of the effect of financial leverage is typical mainly for the American school financial management.

Using this formula, they answer the question by how many percent the net profit for each ordinary share will change if the net result of operating the investment (profitability) changes by one percent.

After a series of transformations, you can go to the formula the following type:

Hence the conclusion: the higher the interest and the lower the profit, the greater the power of financial leverage and the higher the financial risk.

When forming a rational structure of sources of funds, one must proceed from the following fact: find a ratio between borrowed and equity funds at which the value of the enterprise's shares will be the highest. This, in turn, becomes possible with a sufficiently high, but not excessive, effect of financial leverage. The level of debt is a market indicator for the investor of the well-being of the enterprise. Extremely high specific gravity borrowed funds in liabilities indicates increased risk bankruptcy. If a tourist enterprise prefers to make do with its own funds, then the risk of bankruptcy is limited, but investors, receiving relatively modest dividends, believe that the enterprise does not pursue the goal of maximizing profits, and begin to dump shares, reducing the market value of the enterprise.

There are two important rules:

1. If the net result of operating investments per share is small (and the differential of financial leverage is usually negative, the net return on equity and the level of dividends are reduced), then it is more profitable to increase own funds by issuing shares than to take out a loan: attracting borrowed funds funds are more expensive for the enterprise than raising its own funds. However, there may be difficulties in the initial public offering process.

2. If the net result of operating investments per share is large (and the differential of financial leverage is most often positive, the net return on equity and the level of dividends are increased), then it is more profitable to take out a loan than to increase equity: raising borrowed funds costs the enterprise cheaper than raising your own funds. It is very important: control over the power of influence of financial and operating leverage is necessary in case of their possible simultaneous increase.

Therefore, you should start by calculating net return on equity and net earnings per share.

(10)

1. The rate of increase in the enterprise’s turnover. Increased turnover growth rates also require increased financing. This is due to an increase in variables, and often fixed costs, almost inevitable swelling accounts receivable, as well as with many other most various reasons, including cost inflation. Therefore, during a steep rise in turnover, firms tend to rely not on internal, but on external financing with an emphasis on increasing the share of borrowed funds in it, since issue costs, costs of initial public offerings and subsequent payments dividends most often exceed the cost of debt instruments;

2. Stability of turnover dynamics. An enterprise with a stable turnover can afford a relatively larger share of borrowed funds in liabilities and more significant fixed costs;

3. Level and dynamics of profitability. It has been noted that the most profitable enterprises have a relatively low share of debt financing on average over a long period. The enterprise generates sufficient profit to finance development and pay dividends and operates increasingly with its own funds;

4. Asset structure. If the company has significant assets general purpose, which by their very nature can serve as collateral for loans, then an increase in the share of borrowed funds in the liability structure is quite logical;

5. The severity of taxation. The higher the income tax, the lower tax benefits and the ability to use accelerated depreciation, all the more attractive is debt financing for an enterprise due to the attribution of at least part of the interest on the loan to the cost price;

6. Attitude of creditors to the enterprise. The play of supply and demand in the money and financial markets determines the average conditions for credit financing. But specific conditions the provision of this loan may deviate from the average depending on the financial and economic situation of the enterprise. Do bankers compete for the right to provide a loan to an enterprise, or do they have to beg money from lenders - that is the question. The answer to this largely depends real opportunities enterprises to form the desired structure of funds;

8. Acceptable degree risk for enterprise managers. People at the helm may be more or less conservative in terms of how they define acceptable risk upon acceptance financial decisions;

9. Strategic target financial guidelines of the enterprise in the context of its actually achieved financial and economic position;

10. Market status briefly and long-term capital. In unfavorable conditions on the money and capital markets, one often has to simply submit to circumstances, postponing until better times the formation of a rational structure of sources of funds;

11. Financial flexibility of the enterprise.

Example.

Determining the amount of financial leverage economic activity enterprises using the example of the Rus Hotel. Let us determine the feasibility of the amount of the loan attracted. The structure of the enterprise's funds is presented in Table 1.

Table 1

Structure financial resources enterprises of the Rus Hotel

Index	Magnitude
Initial values
Hotel asset less credit debt, million rubles	100,00
Borrowed funds, million rubles.	40,00
Own funds, million rubles.	60,00
Net result of investment exploitation, million rubles.	9,80
Debt servicing costs, million rubles.	3,50
Calculated values
Economic profitability of own funds, %	9,80
Average calculated interest rate, %	8,75
Financial leverage differential excluding income tax, %	1,05
Financial leverage differential taking into account income tax, %	0,7
Leverage	0,67
Effect of financial leverage, %	0,47

Based on these data, we can draw the following conclusion: the Rus Hotel can take out loans, but the differential is close to zero. Minor changes to production process or promotion interest rates can “reverse” the leverage effect. There may come a time when the differential becomes less than zero. Then the effect of financial leverage will act to the detriment of the hotel.

Ural Socio-Economic Institute

Academy of Labor and Social Relations

Department of Financial Management

Course work

Course: Financial management

Topic: The effect of financial leverage: financial and economic content, calculation methods and scope of application in making management decisions.

Form of study: Correspondence

Specialty: Finance and credit

Course: 3, Group: FSZ-302B

Completed by: Mingaleev Dmitry Rafailovich

Chelyabinsk 2009

Introduction

3.1 Controllable factors

Conclusion

Bibliography

Introduction

Profit is the simplest and at the same time the most complex economic category. It received new content in modern conditions economic development country, the formation of real independence of business entities. Being the main driving force market economy, it ensures the interests of the state, owners and personnel of the enterprise. Therefore one of current issues modern stage is the mastery by managers and financial managers of modern methods of effective management of profit generation in the process of production, investment and financial activities of the enterprise. The creation and operation of any enterprise is simplified as an investment process financial resources on a long-term basis in order to make a profit. The priority is the rule that both own and borrowed funds must provide a return in the form of profit. Competent, effective management profit generation involves the construction at the enterprise of appropriate organizational and methodological systems to ensure this management, knowledge of the basic mechanisms of profit generation, the use modern methods its analysis and planning. One of the main mechanisms for achieving this task is financial leverage.

The purpose of this work is to study the essence of the financial leverage effect.

The tasks include:

· consider the financial and economic content

· consider calculation methods

· consider the scope of application

1. The essence of the financial leverage effect and calculation methods

Managing profit generation involves the use of appropriate organizational and methodological systems, knowledge of the basic mechanisms of profit generation and modern methods of its analysis and planning. When using a bank loan or issuing debt securities, interest rates and the amount of debt remain constant during the term of the loan agreement or the circulation period of the securities. The costs associated with debt servicing do not depend on the volume of production and sales of products, but directly affect the amount of profit remaining at the disposal of the enterprise. Since interest on bank loans and debt securities attributed to enterprise expenses ( operating expenses), then using debt as a source of financing is cheaper for the enterprise than other sources, payments for which are made from net profit (for example, dividends on shares). However, an increase in the share of borrowed funds in the capital structure increases the risk of insolvency of the enterprise. This should be taken into account when choosing funding sources. It is necessary to determine the rational combination between own and borrowed funds and the degree of its influence on the profit of the enterprise. One of the main mechanisms for achieving this goal is financial leverage.

Financial leverage) characterizes the use of borrowed funds by an enterprise, which affects the value of return on equity. Financial leverage is an objective factor that arises with the appearance of borrowed funds in the amount of capital used by the enterprise, allowing it to obtain additional profit on own capital.

The idea of ​​financial leverage American concept consists in assessing the level of risk based on fluctuations in net profit caused by the constant value of the enterprise’s costs of servicing debt. Its effect is manifested in the fact that any change in operating profit (earnings before interest and taxes) generates more significant change net profit. Quantitatively, this dependence is characterized by the indicator of the strength of influence of financial leverage (SVFR):

Interpretation of the leverage ratio: it shows how many times earnings before interest and taxes exceed net income. The lower limit of the coefficient is unity. The greater the relative volume of borrowed funds attracted by an enterprise, the greater the amount of interest paid on them, the higher, and the more variable the net profit. Thus, an increase in the share of borrowed financial resources in the total amount of long-term sources of funds, which by definition is equivalent to an increase in the power of financial leverage, ceteris paribus, leads to greater financial instability, expressed in less predictability of net profit. Since the payment of interest, unlike, for example, the payment of dividends, is mandatory, then with a relatively high level of financial leverage, even a slight decrease in the profit received can have adverse consequences compared to a situation where the level of financial leverage is low.

The higher the impact of financial leverage, the more non-linear the relationship between net profit and profit before interest and taxes becomes. A small change (increase or decrease) in earnings before interest and taxes under conditions of high financial leverage can lead to a significant change in net income.

An increase in financial leverage is accompanied by an increase in the degree of financial risk of the enterprise associated with a possible lack of funds to pay interest on loans. For two enterprises with the same production volume, but different levels of financial leverage, the variation in net profit due to changes in production volume is not the same - it is greater for the enterprise with a higher level of financial leverage.

European concept of financial leverage characterized by an indicator of the effect of financial leverage, reflecting the level of additionally generated profit on equity capital at different proportions of the use of borrowed funds. This method of calculation is widely used in the countries of continental Europe (France, Germany, etc.).

Financial leverage effect(EFF) shows by what percentage the return on equity capital increases due to the attraction of borrowed funds into the turnover of the enterprise and is calculated using the formula:

EGF =(1-Np)*(Ra-Tszk)*ZK/SK

where N p is the income tax rate, in fractions of units;

Рп - return on assets (the ratio of the amount of profit before interest and taxes to the average annual amount of assets), in fractions of units;

C зк - weighted average price of borrowed capital, in fractions of units;

ZK - average annual cost borrowed capital; SC - average annual cost of equity capital.

The above formula for calculating the effect of financial leverage has three components:

♦ tax corrector of financial leverage(l-Нп), which shows to what extent the effect of financial leverage is manifested in connection with different levels income taxation;

♦ leverage differential(p a -Ts, k), characterizing the difference between the profitability of the enterprise’s assets and the weighted average calculated interest rate on loans and borrowings;

♦ financial leverage ZK/SK

the amount of borrowed capital per ruble of the enterprise's equity capital. In conditions of inflation, the formation of the effect of financial leverage is proposed to be considered depending on the inflation rate. If the amount of debt of the enterprise and interest on loans and borrowings are not indexed, the effect of financial leverage increases, since debt servicing and the debt itself are paid with already depreciated money:

EGF=((1-Np)*(Ra – Tsk/1+i)*ZK/SK,

where i is a characteristic of inflation (inflationary rate of price growth), in fractions of units.

In the process of managing financial leverage, a tax corrector can be used in the following cases:

♦ if by various types differentiated tax rates have been established for the activities of the enterprise;

♦ if by certain species activities, the enterprise uses income tax benefits;

♦ if individual subsidiaries of the enterprise operate in free economic zones in their own country, where there is a preferential income tax regime, as well as in foreign countries.

In these cases, by influencing the sectoral or regional structure of production and, accordingly, the composition of profit according to the level of its taxation, it is possible, by reducing the average rate of profit taxation, to reduce the impact tax corrector financial leverage on its effect (other things being equal).

The financial leverage differential is a condition for the occurrence of the financial leverage effect. Positive EFR occurs in cases where the return on total capital (Pa) exceeds the weighted average price borrowed resources(tsk)

The difference between the return on total capital and the cost of borrowed funds will increase the return on equity. Under such conditions, it is beneficial to increase financial leverage, i.e. the share of borrowed funds in the capital structure of the enterprise. If R a< Ц зк, создается отрицательный ЭФР, в результате чего происходит уменьшение рентабельности собственного капитала, что в конечном итоге может стать причиной банкротства предприятия.

The higher the positive value of the financial leverage differential, the higher, other things being equal, its effect.

Due to the high dynamics of this indicator, it requires constant monitoring in the process of profit management. This dynamism is due to a number of factors:

♦ during a period of deterioration in financial market conditions (a fall in the supply of loan capital), the cost of raising borrowed funds may rise sharply, exceeding the level accounting profit, generated by the assets of the enterprise;

♦ reduction financial stability in the process of intensively attracting borrowed capital leads to an increase in the risk of bankruptcy, which forces lenders to increase interest rates for loans, taking into account the inclusion of a premium for additional financial risk. As a result, the financial leverage differential can be reduced to zero or even a negative value. As a result, the return on equity will decrease, since part of the profit it generates will be used to service debt at high interest rates;

♦ in addition, during the period of deterioration of the situation in commodity market and a reduction in sales volume, the amount of accounting profit also falls. In such conditions, a negative differential value can be formed even with stable interest rates due to a decrease in the return on assets.

We can conclude that a negative value of the financial leverage differential for any of the above reasons leads to a decrease in return on equity; the use of borrowed capital by an enterprise has a negative effect.

Leverage characterizes the strength of the impact of financial leverage. This coefficient multiplies the positive or negative effect obtained due to the differential. At positive value differential, any increase in the financial leverage ratio causes an even greater increase in its effect and return on equity, and with a negative differential value, an increase in the financial leverage ratio leads to an even greater decrease in its effect and return on equity.

Thus, with a constant differential, the financial leverage ratio is the main generator of both the increase in the amount and level of profit on equity, and the financial risk of losing this profit.

Knowledge of the mechanism of influence of financial leverage on the level of financial risk and profitability of equity capital allows us to purposefully manage both the cost and capital structure of the enterprise.

1.1 The first method of calculating financial leverage

The essence of financial leverage is manifested in the influence of debt on the profitability of the enterprise.

As mentioned above, grouping expenses in the income statement into production and financial nature allows us to identify two main groups of factors affecting profit:

1) the volume, structure and efficiency of managing costs associated with the financing of current and non-current assets;

2) volume, structure and cost of sources of financing [enterprise funds.

Based on profit indicators, enterprise profitability indicators are calculated. Thus, the volume, structure and cost of sources of financing influence the profitability of the enterprise.

Enterprises resort to various sources of financing, including through the placement of shares or attraction of loans and borrowings. Attraction share capital is not limited by any time period, therefore a joint-stock company considers the raised funds of shareholders to be its own capital.

Attraction Money through credits and loans limited certain deadlines. However, using them helps maintain control over the controls. joint stock company, which may be lost due to the emergence of new shareholders.

An enterprise can operate by financing its expenses only from its own capital, but no enterprise can operate only on borrowed funds. As a rule, an enterprise uses both sources, the relationship between which forms the structure of the liability. The structure of liabilities is called financial structure, the structure of long-term liabilities is called capital structure. Thus, the capital structure is integral part financial structure. Long-term liabilities that make up the capital structure and include equity and a share of fixed-term borrowed capital are called permanent capital

Capital structure = financial structure - short-term debt = long-term liabilities(constant capital)

When forming a financial structure (the structure of liabilities as a whole), it is important to determine:

1) the ratio between long-term and short-term borrowed funds;

2) the share of each of the long-term sources (equity and borrowed capital) in the total liabilities.

The use of borrowed funds as a source of financing assets creates the effect of financial leverage.

Effect of financial leverage: the use of long-term borrowed funds, despite their payment, leads to an increase in return on equity.

Let us recall that the profitability of an enterprise is assessed using profitability ratios, including the ratios of return on sales, return on assets (profit/asset) and return on equity (profit/equity).

The relationship between return on equity and return on assets indicates the importance of a company's debt.

Return on equity ratio (in case of using borrowed funds) = profit - interest on debt repayment debt capital/equity capital

We remind you that the cost of debt can be expressed in relative and absolute terms, i.e. directly in interest accrued on a loan or loan, and in in monetary terms- amount interest payments, which is calculated by multiplying the remaining debt amount by the interest rate adjusted for the term of use.

Return on assets ratio - profit/assets

Let's transform this formula to get the profit value:

assets

Assets can be expressed through the size of their financing sources, i.e. through long-term liabilities (the sum of equity and borrowed capital):

Assets = equity + borrowed capital

Let's substitute the resulting expression of assets into the profit formula:

Profit = return on assets ratio (equity + debt capital)

And finally, let’s substitute the resulting expression of profit into the previously transformed formula for return on equity:

Return on equity = return on assets ratio (equity + borrowed capital) - interest on debt repayment borrowed capital / equity capital

Return on equity= return on assets ratio equity capital + return on assets ratio debt capital - interest on debt repayment debt capital / equity capital

Return on equity = return on assets ratio equity + debt capital (return on assets ratio - interest on debt repayment) / equity

Thus, the value of the return on equity ratio increases as debt increases until the value of the return on assets ratio is higher than the interest rate on long-term borrowed funds. This phenomenon is called effect of financial leverage.

For an enterprise that finances its activities only with its own funds, the return on equity is approximately 2/3 of the return on assets; for an enterprise using borrowed funds - 2/3 of the return on assets plus the effect of financial leverage. At the same time, return on equity increases or decreases depending on changes in the capital structure (the ratio of equity and long-term borrowed funds) and the interest rate, which is the cost of attracting long-term borrowed funds. This is where it manifests itself financial leverage .

Quantitative assessment of the impact of financial leverage is carried out using the following formula:

2/3 (return on assets - interest rate on loans and borrowings) (long-term debt/equity)

From the above formula it follows that the effect of financial leverage occurs when there is a discrepancy between the return on assets and the interest rate, which is the price (cost) of long-term borrowed funds. In this case, the annual interest rate is adjusted to the term of the loan and is called the average interest rate.

Average interest rate- the amount of interest on all long-term loans and borrowings for the analyzed period / total amount attracted loans and borrowings in the analyzed period 100%

The formula for the financial leverage effect includes two main indicators:

1) the difference between return on assets and the average interest rate, called the differential;

2) the ratio of long-term debt and equity capital, called leverage.

Based on this, the formula for the effect of financial leverage can be written as follows.

Financial leverage = 2/3 differential lever arm

After paying taxes, 2/3 of the differential remains. The formula for the power of financial leverage, taking into account taxes paid, can be presented as follows:

Strength of financial leverage = (1 - profit tax rate) 2/3 differential * leverage

It is possible to increase the profitability of own funds through new borrowings only by controlling the state of the differential, the value of which can be:

1) positive, if the return on assets is higher than the average interest rate (the effect of financial leverage is positive);

2) equal to zero, if the return on assets is equal to the average interest rate (the effect of financial leverage is zero);

3) negative, if the return on assets is below the average interest rate (the effect of financial leverage is negative).

Thus, the value of the return on equity ratio will increase as borrowed funds increase until the average interest rate becomes equal to the value of the return on assets ratio. At the moment of equality of the average interest rate and the return on assets ratio, the effect of the lever will “reverse”, and with a further increase in borrowed funds, instead of increasing profits and increasing profitability, real losses and unprofitability of the enterprise will occur.

Like any other indicator, the level of financial leverage effect must have an optimal value. It is believed that optimal level equal to 1/3-1/3 of the return on assets.

1.2 The second method of calculating financial leverage

By analogy with production (operating) leverage, the force of influence of financial leverage can be defined as the ratio of the rate of change in net and gross profit.

The power of financial leverage = rate of change in net profit / rate of change in gross profit

In this case, the strength of financial leverage implies the degree of sensitivity of net profit to changes in gross profit.

1.3 The third method of calculating financial leverage

Financial leverage can also be defined as percentage change net profit for each common share in circulation due to changes in the net result of the operation of investments (earnings before interest and taxes).

The power of financial leverage= percentage change in net profit per common share in circulation / percentage change in the net result of investment operation

Let's look at the indicators included in the financial leverage formula.

The concept of profit per one common share in circulation.

Net profit ratio per share in circulation = net profit - amount of dividends on preferred shares / number of common shares in circulation

Number of common shares outstanding = total issued common shares - own common shares in the company's portfolio

Let us recall that the earnings per share ratio is one of the most important indicators affecting the market value of a company's shares. However, it is necessary to remember that:

1) profit is the object of manipulation and depending on the methods used accounting can be artificially high (FIFO method) or low (LIFO method);

2) the direct source of payment of dividends is not profit, but cash;

3) by purchasing its own shares, the company reduces their number in circulation, and therefore increases the amount of profit per share.

The concept of the net result of operating an investment. In Western financial management, four main indicators are used to characterize the financial results of an enterprise:

1) added value;

2) the gross result of the operation of investments;

3) the net result of the operation of investments;

4) return on assets.

1. Added value (VA) represents the difference between the cost of manufactured products and the cost of consumed raw materials, materials and services.

Value added - the cost of manufactured products - the cost of consumed raw materials, materials and services

In its own way economic essence added value. represents that part of the value of the social product that is newly created in the production process. Another part of the cost of the social product is the cost of used raw materials, materials, electricity, work force etc.

2. Gross investment operating result (BREI) represents the difference between value added and labor costs (direct and indirect). Tax on overspending of wages may also be deducted from the gross result.

Gross result of investment exploitation = added value - expenses (direct and indirect) for wages - tax on overexpenditure of wages

Gross operating result of investments (BREI) is an intermediate indicator financial results activity of the enterprise, namely, an indicator of the sufficiency of funds to cover the expenses taken into account when calculating it.

3. Net result of investment exploitation (NREI) represents the difference between the gross result of the operation of investments and the costs of restoring fixed assets. In its economic essence, the gross result of the exploitation of investments is nothing more than profit before interest and taxes. In practice, book profit is often taken as the net result of the operation of investments, which is incorrect, since book profit (profit transferred to the balance sheet) represents profit after paying not only interest and taxes, but also dividends.

Net result of investment exploitation = gross result of investment operation - costs of restoration of fixed assets (depreciation)

4. Return on assets (RA). Profitability is the ratio of the result to the money spent. Return on assets refers to the ratio of profit to

payment of interest and taxes on assets - funds spent on production.

Return on assets = (net result of investment exploitation / assets) 100%

Transforming the return on assets formula will allow you to obtain formulas for return on sales and asset turnover. To do this, we will use a simple mathematical rule: Multiplying the numerator and denominator of a fraction by the same number will not change the value of the fraction. Let's multiply the numerator and denominator of the fraction (return on assets ratio) by the sales volume and divide the resulting indicator into two fractions:

Return on assets= (net result of the operation of investments sales volume / assets sales volume) 100% = (net result of the operation of investments / sales volume) (sales volume / assets) 100%

The resulting return on assets formula is generally called the Dupont formula. The indicators included in this formula have their own names and meanings.

The ratio of the net result of the operation of investments to the volume of sales is called commercial margin. Essentially, this ratio is nothing more than a sales profitability ratio.

The indicator “sales volume / assets” is called the transformation ratio; essentially, this ratio is nothing more than the asset turnover ratio.

Thus, regulating the profitability of assets comes down to regulating the commercial margin (profitability of sales) and the transformation ratio (asset turnover).

But let's return to financial leverage. Let's substitute the formulas for net profit per common share in circulation and the net result of operating investments into the formula for the power of financial leverage

Strength of financial leverage = percentage change in net profit per common share in circulation / percentage change in net investment operating result = (net profit - amount of dividends on preferred shares / number of common shares in circulation) / (net investment operating result / assets) 100%

This formula allows you to estimate by what percentage the net profit per one common share in circulation will change if the net result of operating the investment changes by one percent.

2. The combined effect of operating and financial leverage

The effect of production (operating) leverage can be combined with the effect of financial leverage and obtain the conjugate effect of production (operating) and financial leverage, i.e. production and financial, or general, leverage.

In this case, a synergy effect appears, which consists in the fact that the value of the aggregate indicator is greater arithmetic sum values ​​of individual indicators.

Thus, the value of production and financial (total) leverage is greater than the arithmetic sum of the values ​​of the indicators of production (operational) and financial leverage.

Leverage as a risk meter

Leverage is not only a method of asset management aimed at increasing profits, but also a measure of risk associated with investments in the activities of an enterprise. In this case, they distinguish:

1) business risk, measured by production (operational) leverage;

2) financial risk, measured by financial leverage;

3) total risk, measured by the total (production and financial) leverage.

Financial leverage is not only a method of managing the profit and profitability of an enterprise, but also a risk meter.

The greater the influence of financial leverage, the greater, and, conversely, the less the influence of financial leverage, the less:

1) for shareholders - the risk of a fall in the level of dividends and stock prices;

2) for creditors - the risk of non-repayment of the loan and non-payment of interest.

Combining the actions of production (operational) I and financial leverage means increasing the total risk, the risk associated with the enterprise. In this case, the effect of synergy appears, i.e. the value of the total risk is greater than the arithmetic sum of the indicators of production (operational) and financial risks.

3. The power of financial leverage in Russia

During large-scale research opportunities for domestic business to manage the capital structure, at the first stage the question was explored: do Russian companies manage their capital structure and, when building appropriate financial strategies, are they aware of the financial risk that grows with an increase in borrowed capital? The second study examined whether the domestic business itself is the real subject of capital structure management and to what extent the effect of financial leverage depends on external factors?

Who determines the capital structure in Russia - the domestic business itself or, perhaps, does it spontaneously develop under the influence of external circumstances? It is obvious that businesses are trying to play in the financial market using different financing strategies. The differences in the strategies being implemented are determined, first of all, by the scale of the business. In general, it can be stated that Russian companies and corporations have sufficiently mastered financial strategies, including capital structure management, but after 2003 the interests of large businesses focused on external borrowings, while small and medium business maintained and strengthened its position in the domestic financial market.

The mechanisms for raising capital by large businesses differ from those available to medium and small businesses. If representatives of the first withdraw their financial assets to international stock exchanges and receive cheap loans from the largest European and American banks, then small businesses are content with very expensive loans from domestic banks. It looks like this: today big business and banks faced the global liquidity crisis that began in the second half of 2007 and finally realized the growing financial risk. Apparently, medium and small businesses will have to pay for underestimating the risk, and ultimately the population of Russia will have to pay the price. Conditions for long-term lending in the domestic financial market have tightened - the cost of loans after long period declines increased sharply, volumes decreased.

The observed differentiation of financial strategies depending on the scale of domestic business entities is associated with the degree of influence of factors on them external environment. The more resistant a company is to the influence of external factors, the more independent it is in managing its capital structure. Therefore, to begin with, let us determine which of the external and internal environment domestic business can (and does use) use financial leverage to increase the effect and impact of financial leverage.

3.1 Controllable factors

The EFR is positive if the financial leverage differential is positive and the company's return on assets exceeds the cost of borrowed capital. The company can influence the value of the differential, but in a limited way: on the one hand, by increasing production efficiency (economies of scale), and on the other, through access to sources of cheap borrowed capital. The financial leverage differential is an important information impulse not only for business, but also for potential creditors, as it allows you to determine the risk of providing new loans to the company. The larger the differential, the lower the risk for the lender and vice versa. High leverage means significant risk for both the borrower and the lender.

The magnitude of the impact of financial leverage quite accurately shows the degree of financial risk associated with the company. The greater the share of costs in taxable profit (before paying interest on servicing borrowed capital), the greater the impact of financial leverage and the higher the risk of loan non-repayment.

The financial risk generated by financial leverage consists of the risk of the company's return on assets falling below the cost of borrowed capital (the differential becomes negative) and the risk of reaching such a leverage value when the company is no longer able to service the borrowed capital (the borrower defaults).

Among the parameters influencing EFR and SVFR, we will highlight those that companies can control to some extent, and uncontrollable ones related to external factors. The return on assets parameter can be considered manageable, although not fully, since its value is determined by the qualifications of management, the ability of managers to use favorable market conditions to the benefit of the company, not only when selling products, but also by attracting external capital. The average cost of borrowed capital also refers to controllable factors, although indirectly: the price and other parameters of the availability of loans for a company are largely determined by its credit rating, credit history, growth dynamics, sometimes - scale and industry affiliation. Finally, the leverage of financial leverage, that is, the ratio of debt and equity capital (its structure) is determined by the company itself.

Among the parameters of the effect of financial leverage that are not controlled by companies is the income tax rate.

Is it possible to increase the EGF by varying the specified parameters? Do its ability to manage, for example, return on assets, depend on the scale of a company’s business?

It is obvious that the profitability of assets of companies that supply products for export, given favorable market conditions, is not always the result of management influence alone. Today, companies engaged in the extraction of fuel, energy and other minerals, the production of coke, petroleum products, chemical, metallurgical production and the production of finished metal products, or providing communication services, receive and consume rent under favorable market conditions. Almost all business in these areas of activity is represented by large and major corporations, often with significant government participation.

The extremely favorable market conditions prevailing on world markets contribute to increasing the profitability of exporting companies not only when selling products, but also when attracting inexpensive capital on external financial markets. Indeed, until recently these corporations had access to external long-term loans at a rate of 6-7%, while in Russian banks the cost of loans is 2-2.5 times higher. It was often simply difficult for the largest Russian companies to refuse loans, since they were presented to them, one might say, on a silver platter: “Foreigners literally ran after Russian banks, primarily with state capital, offering them money... There is a lot of free money in the world, but Russia remains attractive country for investments - a solid trade surplus, budget surplus, huge reserves, not too high inflation" 1

Finally, the capabilities of the largest corporations to manage their capital structure are maximum, since favorable market conditions and cheap borrowed capital for some time significantly reduced not only financial, but also general market risk for them.

3.2 Business size matters

Large Russian businesses have already lost the ability to refinance loans and increase new external debt. In this regard, there has been a significant increase in the number and scale of mergers and acquisitions in the financial sector.

But let's return to calculating the effect of financial leverage: the last of the parameters listed above that determine the effect and strength of the impact of financial leverage is income tax - a factor not controlled by business. It “works” in favor of domestic corporations, since, as the formula shows, the higher the tax rate, the lower the effect of financial leverage. Russia can boast of one of the lowest income taxes in the world, the rate of which is 24%. Having gained access to cheap Western loans, domestic big business “skimmed the cream” in this area as well.

Well, medium and small businesses, involuntarily remaining faithful to the domestic financial market, were forced to be content with the sources that this market offered. It must be admitted that the flow of “hot” Western money that splashed onto the Russian market contributed to a gradual decrease in the cost of domestic loans for corporations. Banking margins, which reached their maximum in 2004, when the largest banks gained access to the external debt capital market, gradually declined, as a result, the price of loans in the domestic market decreased markedly. It was during this period that the scale grew mortgage lending population, housing construction. Having become cheaper, although still expensive compared to Western ones, domestic loans still found use, working for Russia.

Medium-sized businesses sought and found new ways to cheaper debt capital. Thus, since 2003, the scale of borrowing through the issuance of corporate bonds by medium-sized companies has noticeably expanded. Moreover, bonds were often placed by private subscription, which, as is known, significantly reduces the issuer’s costs for the issue. Really, closed method placement of bonds, practiced with a relatively small (but sufficient for medium-sized business) scale of issue, on the one hand, provides the issuer not only with capital, but also a good credit history for future possible IPOs, and on the other, allows it to obtain borrowed capital at a cost lower than bank capital .

Why do closed subscription participants accept low returns? The fact is that those who are interested in the implementation of the invested project are involved in a closed subscription - suppliers of equipment, raw materials, buyers of products, local authorities who care about the emergence of new jobs and the investment attractiveness of their city or region. Ultimately, in addition to profitability, subscription participants receive other benefits: suppliers of raw materials - a reliable sales market, buyers - a reliable supplier, and local authority- new jobs, growth tax revenue and so on.

For small businesses, such sources of borrowed capital are practically unavailable. For those companies that are not included in government programs support for small businesses and did not gain access to cheap loans through them, they had to attract expensive bank loans, look for partners with capital, turning them into co-owners, losing independence, or go into the shadows and develop by reducing tax and extra-budgetary payments.

Does (and to what extent) financial risk influence the formation of financial strategies of entities of different scales? Russian business? Minimal financial risk in conditions of favorable market conditions was borne by the largest corporations exporting raw materials and low-value products, which gained access to cheap Western debt markets. But small and medium-sized businesses that borrowed on the domestic, more expensive market also faced higher financial risk.

The same situation is observed in relation to domestic banks, which were unable to gain access to cheap Western loans. Since rates on interbank loans, although decreasing, were to a lesser extent than for banks of the first (6-7%) and second circle (7-8%), medium and small domestic banks had to be content with a lower margin, established at 8-8%. 9%. Under the influence of the liquidity crisis, by the end of 2007, rates on interbank loans again increased by 1.5-2%, less for the first circle banks and more for the third circle.

Others are no less significant for domestic business entities internal factors, affecting financial strategies in different ways. Without going into detail here, we will still list them:

* the level of the required rate of return, profitability (“appetites” of companies are not the same; accordingly, their financial strategies and risks differ);

* cost structure (the level of operating leverage correlates with industry and depends on the capital intensity of the technologies used);

* industry affiliation company, its organizational and legal form, stage life cycle, age, market place, etc.

Since in an open economy, and Russian economy is approaching its standards, the impact of the external environment on the company’s activities is great, it can be assumed that the effect of financial leverage is influenced by external factors in a wider range of directions than internal ones, and therefore their influence may be greater. External to the business are factors such as the dynamics of bank margins, average market value bank loans and non-bank sources for the corporate sector.

Taking into account the changes in the external environment introduced government policy V different areas economy, we will expand the list of considered internal and external factors influencing the effect of financial leverage and the strength of its impact. Let us focus on those external environmental factors that are regulated by the market and the state.

3.3 Structure of external factors affecting the effect of financial leverage

We will consider changes in government policy and market conditions emerging in world markets as indicators of the impact on the financial behavior of a company of external factors causing an increase or decrease in the effect of financial leverage. The impact of market conditions on the world markets for raw materials, metals and other low-value products, as well as on financial markets by the end of 2007 has already been largely discussed. Let us only add that the instability of the exchange rates of the ruble and the main currencies used for international payments also noticeably changes financial behavior Russian companies and banks, primarily those with access to foreign markets.

Money exchange rate and interest rates

Peculiarity current situation the fact is that in the last two years the exchange rate of the American dollar, still the main currency of international payments, has been falling relative to the ruble and a number of other national currencies, but primarily, relative to the euro. Although the ruble exchange rate relative to the European currency has been declining, in the last 3-4 years the rate of this decline has been slowing down, which is forcing large exporters, including Russian ones, to switch to the euro.

As is known, the exchange rate dependence national currency from the rate of inflation is especially high in countries with a large volume of international exchange of goods, services and capital, and the connection between the dynamics of currencies and the relative rate of inflation is most clearly manifested when calculating the exchange rate based on export prices. In this regard, both Russia and the United States are in approximately equal positions, with the only exception that Russian oil and gas exports are accompanied by a long and high increase in world prices for these products, which has a positive impact on balance of payments Russia, and the United States in the conditions of a costly and unsuccessful military operation The Middle East has a balance of payments deficit.

Just like other exporting countries, Russia uses a wide arsenal of means to regulate international credit relations - these are tax and customs benefits, state guarantees and interest rate subsidies, grants and loans. However, to a greater extent Russian state supports large corporations and banks, which usually have a solid state participation, that is, itself. But medium and small businesses get little from the flow of benefits pouring onto large businesses. On the contrary, loans for the purchase of imported equipment are provided to small and medium-sized companies that are not included in small business support programs on significantly more stringent conditions than for large businesses.

On exchange rate and the direction of movement of world capital is also influenced by the difference in interest rates in different countries. Raising interest rates stimulates the influx of foreign capital into the country and vice versa, and the movement of speculative, “hot” money increases the instability of balances of payments. But regulation of interest rates is unlikely to be productive due to the need to control liquidity, which means it can hinder economic growth. At the same time, the Central Bank reduced the rate of contributions to the Mandatory Reserve Fund for ruble deposits. This measure is justified by the fact that in Europe mandatory reserve standards are lower, and Russian banks find themselves in unequal conditions.

Conclusion

In general, the above allows us to draw the following conclusions.

1. Factors external and internal to business influence the effect of financial leverage and the strength of its impact, and this has a different impact on the financial behavior of domestic companies and banks of different sizes.

2. External factors related to government regulation of certain areas of business activity (taxation, dynamics of the cost of bank loans, government funding business support programs, etc.), as well as with the impact of the market (yield on bonds and stocks, price dynamics on the world market, dynamics of exchange rates, etc.), have a stronger influence on the effect of financial leverage than internal factors controlled by the business.

3. Assessing the degree of influence of external factors, first of all government regulation, on the financial behavior of business entities of different sizes shows that it is focused on supporting, first of all, banks and large businesses, sometimes to the detriment of the interests of medium and small businesses.

4. A feature of large Russian businesses that make maximum use of the effect of financial leverage in their financial strategies is the significant participation of the state in these largest corporations and banks. Thus, for the latter, government regulation is not a completely external factor.

5. Only business in which the state does not participate, that is, medium and small companies, is really involved in managing the capital structure in a changing external environment and due to its capabilities. The state does this for big business, creating most favored nation treatment for it.

6. Management of the capital structure and the formation of appropriate financial strategies by small and medium-sized businesses pushes them beyond the legal framework, since the Russian financial market today is built and regulated to suit the interests of large businesses with state participation.

7. The global liquidity crisis, in which the Russian economy is also involved through large-scale loans from large businesses on the foreign financial market, may further weaken financial opportunities medium and small businesses and lead to massive bankruptcies of enterprises in these categories, while large businesses will be protected by the state.

To summarize, it should be noted that such a concept as accounts payable it is impossible to give an unambiguous assessment. Borrowed funds are necessary for the development of an enterprise. However, poor management can lead to an increase in debt and the inability to pay off debts. On the other hand, with skillful management, with the help of borrowed funds you can save and increase your own funds. Therefore, borrowing money can bring both benefit and harm.

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