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Option for Credit in Fundamenting the Financial Structure of Enterprise

Author

Listed:
  • Nicolae SICHIGEA
  • Dan Florentin SICHIGEA

    (University of Craiova)

Abstract

The development of the economic activities make almost inevitable the necessity of completing the equities with sources which represent the object of the enterprise’s leveraging. In our paper, we intend to underline the effects of a correct debt policy, concretized in an optimum capital structure, respectively in establishment of such report between the debt capital and the equities that could determine a minimum weighted average cost of capital. Reaching the objective of the optimum financial structure could be achieved most of the time, on a pragmatic way, based on the analysis of many hypothesis of leveraging, the managers taking the option towards the maximization of the firm’s value.

Suggested Citation

  • Nicolae SICHIGEA & Dan Florentin SICHIGEA, 2008. "Option for Credit in Fundamenting the Financial Structure of Enterprise," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 3(36), pages 1088-1098, May.
    • Handle: RePEc:aio:aucsse:v:3:y:2008:i:11:p:1088-1098
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    More about this item

    Keywords

    credit; effect of financial leverage; financial structure; cost of capital;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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