Optimisations of the Cost and Structure of Created Investment Resources of an Entity Based on Financial Leverage Elements

Abstract

The article demonstrates the author's method for cost and structure optimisation of created investment resources of an entity based on financial leverage tools for effective financing of real investments in case of development of an investment strategy for an entity development, namely: - Criteria of investments financing from line items of conservative, compromise, and aggressive approaches are determined using in the scheme of financing owner's capital, and also short-term and long-term loan fund capital; - Step-by-step creation of the financial performances considering industry specifics, scale of functioning of economic agents' activities is offered. Effective activities of the entities in long terms, ensuring high rates of their development and competitiveness increase in the conditions of market economy, are substantially determined by the level of their investment activity and the range of investing activities. One of the main tasks of forming the investment resources is the optimisation of their structure taking into account the profitability level and the investment risk. The optimisation of a capital structure by criterion of financial profitability level maximisation (profitability of the owner's capital) is reached by means of financial leverage mechanism. Profitability level maximisation for the capital considering the set level of financial risk is performed through the financial leverage, showing the use of borrowed funds by the entity. Carrying out complex calculations within the investment analysis with use of mechanisms of financial leverage allows determining the optimum structure of the created investment resources providing maximisation of the profitability level.

DOI: 10.5901/mjss.2015.v6n3s3p303