The impact of debt burden on performance of Russian companies
In the financial management of the company, one of the key aspects is the formation and optimization of the capital structure. Making decisions about the choice of sources of financing, management, as a rule, focuses on such criteria as: maximizing the market value of the company, maximizing the profitability of owners, improving indicators that directly reflect the efficiency of internal business processes. The article is devoted to testing hypotheses about the impact of the debt level on the performance of Russian companies in various industries, expressed by indicators of profitability. The analysis had shown that the level of companies’ borrowings is more than a third of the gross domestic product, volume of debt is growing in dynamics, the level of debt varies significantly by industry (it is higher in construction and manufacturing industries and less in the segments of transport and communication and production and distribution of electricity gas and water). Evaluation of the impact of the debt burden on the return on assets and the return on margin, based on the regression model, showed partial confirmation of the hypothesis of the negative impact of debt on the profitability in several industries. In other sectors, positive correlation has been established. For all considered segments the significance of industry characteristics (tangibility, firm size, growth potential, liquidity) in explaining variations in profitability was confirmed. The results show a close relationship between decisions on the formation of the capital structure and the company's performance and can be taken into account by the management of Russian companies for the development and improvement of financial strategies.