Finance and Credit

The effects of financial capital structure on corporation performance

Vol. 24, Iss. 8, AUGUST 2018

Received: 21 May 2018

Received in revised form: 9 June 2018

Accepted: 24 June 2018

Available online: 29 August 2018


JEL Classification: L11, L24, L61

Pages: 1814–1826

Agafonova I.I. Financial University under Government of Russian Federation, Moscow, Russian Federation

ORCID id: not available

Subject The article addresses the equity to debt ratio of a corporation and the impact of the two capitals on financial sustainability. PAO Mechel serves as an object of the research, as over the analyzed period the company has been in the risk zone and subject to a loss of solvency.
Objectives The purpose of the study is to define the role of financial capital structure, reveal problems and develop measures to improve the financial sustainability of the corporation.
Methods The study rests on analytical methods and statistical techniques, like comparison, method of averages, grouping, graphical methods and method of analytical tables construction.
Results To recover, the corporation should reduce high-margin production costs of iron and steel companies that may have a significant impact on consolidated statements. Furthermore, it should continue refinancing loans to enhance its financial position.
Conclusions and Relevance The proposed streamlining of the considered companies and the entire corporation will generate cash flows and increase shareholders' equity due to a reduction in the retained loss. The large metallurgical group will be able to discharge its liabilities or increase its equity capital to achieve a balance between debt and equity funds.

Keywords: loan, retained earnings, financial stability


  1. Lichak R.A. [Financial sustainability as the criterion of balanced satisfaction of stakeholders' requirement]. Uchet. Analiz. Audit = Accounting. Analysis. Audit, 2016, no. 1, pp. 117–121. (In Russ.)
  2. Kurilova A.A., Kurilov K.Yu. [Features of the financial analysis sustainability at the chemical industry]. Karel'skii nauchnyi zhurnal = Karelian Scientific Journal, 2017, vol. 6, no. 1, pp. 74–77. (In Russ.)
  3. Fedotova M.A., Tazikhina T.V., Mal'tsev A.S. [Analysis quantitative techniques of relation financial stability from company value]. Effektivnoe antikrizisnoe upravlenie = Effective Crisis Management, 2014, no. 2, pp. 52–63. (In Russ.)
  4. Alferov V.N., Astashkina T.A., Sokolova D.A. [Comparative analysis of Russian and foreign financial ratios]. Strategii biznesa = Business Strategies, 2016, no. 5, pp. 3–10. (In Russ.)
  5. Kameneva E.A., Likhacheva O.N., Mingaliev K.N. et al. Korporativnyi rost: metodologiya izmereniya i upravlencheskii instrumentarii (finansovyi aspekt): monografiya [Corporate growth: A methodology to measure and management tools (a financial aspect): a monograph]. Moscow, Nauchnye tekhnologii Publ., 2013, 315 p.
  6. Flood M.D., Lemieux V.L., Varga M., Wong B.L.W. The Application of Visual Analytics to Financial Stability Monitoring. Journal of Financial Stability, 2016, vol. 27, pp. 180–197. URL: Link
  7. Milne A. Editorial – Data Standards, Information and Financial Stability. Journal of Financial Stability, 2016, vol. 27, pp. 155–159. URL: Link
  8. Lukasevich I.Ya. [Cash flow analysis as a tool for strategic business management]. Upravlencheskie nauki v sovremennom mire = Managerial Sciences in the Modern World, 2016, no. 1, pp. 4–8. (In Russ.)
  9. Pashtova L.G. [Possible loss of business enterprises]. Vestnik Severo-Osetinskogo gosudarstvennogo universiteta imeni Kosta Levanovicha Khetagurova = Journal of North Ossetian State University, 2014, no. 2, pp. 253–256. (In Russ.)
  10. Gutkovskaya E.A., Kolesnik N.F. [Assessing the financial stability of a commercial organization and measures for its enhancement]. Vestnik Samarskogo universiteta. Ekonomika i upravlenie = Vestnik of Samara University. Economics and Management, 2015, no. 2, pp. 35–47. (In Russ.)
  11. Donets S.A., Mogilat A.N. [Lending and financial sustainability of Russian industrial companies: microeconomic aspects of the analysis]. Den'gi i kredit = Russian Journal of Money and Finance, 2017, no. 7, pp. 41–51. (In Russ.)
  12. Abdikeev N.M., Grineva N.V., Kuznetsov N.V. [Methods and models of financial support to enterprises subject to investment risks]. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience, 2013, no. 23, pp. 8–17. URL: Link (In Russ.)
  13. Morozova N.S., Merkulova E.Yu. [Analysis of reserves of decrease in product costs]. Sotsial'no-ekonomicheskie yavleniya i protsessy = Socio-economic Phenomena and Processes, 2016, vol. 11, no. 7, pp. 21–27. (In Russ.)
  14. Khalyapin A.A. [Optimization of structure of accounting balance as the factor of increase of financial stability of the organization]. Politematicheskii setevoi elektronnyi nauchnyi zhurnal kubanskogo gosudarstvennogo agrarnogo universiteta, 2016, no. 120. (In Russ.) URL: Link

View all articles of issue


ISSN 2311-8709 (Online)
ISSN 2071-4688 (Print)

Journal current issue

Vol. 24, Iss. 10
October 2018