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The profitability – risk relationship and financing decision


  • Barbuta Misu, Nicoleta


The enterprise financial decision is a rational process for option to the optimal variant related to financing and investments. For the capital investment to be justified, the profitability of the invested money must be at least equal with the profitability of the alternative investment opportunities with the same risk on market. The choosing of a way for financing is determined on the one side by their cost and on the other side by the existent capital structure. In this paper I tried to analyse the profitability – risk relationship in the financing decision for the “NIKOS” Ltd.

Suggested Citation

  • Barbuta Misu, Nicoleta, 2007. "The profitability – risk relationship and financing decision," MPRA Paper 17808, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17808

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    financing decision; profitability; risk; market value of the enterprise; capital structure;

    JEL classification:

    • 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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