Decisions of formation of a trading company's capital structure based on EVA maximization

Šiame straipsnyje analizuojami prekybinės įmonės AB „Apranga“ kapitalo struktūros, orientuotos į ekonominės pridėtinės vertės (toliau - EVA) maksimizavimą formavimo sprendimai. Įmonės dažniausia susiduria su problema, kokias lėšas - skolintas ar nuosavas - naudoti veiklai finansuoti. Įvairūs finansavimo būdai susiję su kapitalo sąnaudomis, kurias tinkamai valdant galima sukurti didesnę įmonės EVA. Analizuojant ir vertinant AB „Apranga“ kapitalo struktūros formavimo ypatumus, nagrinėti finansų struktūros rodikliai, kapitalo svertai, jų ryšys su pelningumo ir šakos rodikliais, nustatyta vidutinių svertinių kapitalo sąnaudų, ekonominės pridėtinės vertės ir skolos koeficiento priklausomybė. Atlikti skaičiavimai leido pagrįsti kapitalo struktūros formavimo ir įmonės vertės teorijų teiginius.Most of the business decisions are based on theories of capital structure formation. Appropriate choice of capital structure can guarantee a profitable and long-term activity of the company. Financial stability and problems of insolvency risk are mainly attributed to the amount of borrowed capital in the capital structure, or simply financial leverage. When choosing the most rational option for accumulation of financial resources, it is necessary to identify and assess factors affecting the making of strategic decisions on financing. Attempts to find out how the capital structure theories based on EVA (economic value added) maximization work in practice, which factors and to what extent influence the choice of leverage, remain a relevant research problem. Based on the statements about capital structuring in Lithuania and international empirical studies, it is expedient to assess the commercial companies' financial leverage with industry indicators, moreover, it is relevant to find out the "Apranga" AB company's capital leverage relationship with indicators of profitability. Retail industry data show that financial leverage ranges from 0.35 to 0.58. In this sector borrowing is very extensive. This can be justified by the fact that companies may lack the working capital for project implementation, therefore long-term debts are chosen, as they do not have to be repaid immediately. When comparing the capital leverage of "Apranga" AB company and the retail sector, it is seen that the company's quota of borrowed capital over the period under analysis generally does not deviate from the industry's indications. Significant differences may be noticed in debt-equity coefficient, which in 2008-2009 was almost twice lower of "Apranga" AB than of the retail business sector. Often there is a tendency among businesses earning more and more profit to borrow less. Perhaps the situation on the Lithuanian market is approaching the situation in the Western countries, where the theory of choice sequence is considered to be the most accurate theory to explain companies' decisions in the capital structuring. As supporters of the theory of choice sequence say, financial leverage of the company "Apranga" AB increases with tangible assets and investment opportunities, and decreases with increasing profitability. That is, investments of the company "Apranga" AB are financed by retained profit, maintaining a constant debt coefficient, except for 2009, when the share of borrowed capital in the whole capital decreased. Then between leverage and net profitability there was a negative relationship. After mercantile company's capital structure formation analysis and assessment of the potential for maximizing EVA, it was found that in formation of a company's capital structure it is necessary to take into account strengths, weaknesses, opportunities, and threats of each capital. The main criterion for decisions on enterprise development and evaluation of its evolution is value, which indicates the share price, and the main business owners' objective is maximization of it, which means a discovery of the way to maximize the company's value. In order to make the right decisions linked to the value increase, modern value measurements were introduced. One of them is the economic value added (EVA). According to mercantile company "Apranga" AB capital structure formation and EVA maximisation analysis, the dependence between weighted average cost of capital, economic value added and the debt coefficient was determined. It appears that when the weighted average cost of capital increases, the commercial value of the company decreases. To find out the mercantile company's capital structure formation decisions based on the maximization of EVA, there were situations simulated with different costs of debt capital (2.5% and 6%) and the values of rate of return required by owners (10% and 15%). This evaluation of choice of rational capital structure showed that using different cost of capital and internal rate of return required by owners, the mercantile company allocates the largest part in capital structure to borrowings. Therefore, financing of business by borrowed capital produces a positive effect on a company's economic performance, because the maximum economic value added is achieved and the weighted average cost of capital is minimized