APPLICATION OF COST OF CAPITAL FOR CAPITAL STRUCTURING IN CROATIAN FIRMS

Silvije Orsag () and Josip Mitar
Additional contact information
Silvije Orsag: Faculty of Economics and Business, University of Zagreb
Josip Mitar: Brodotrogir

UTMS Journal of Economics, 2014, vol. 5, issue 2, 151-158

Abstract: This paper show result of empirical analysis application of cost of capital for capital structuring in Croatian firms. Intensity of this applications is highly unrespectable because Croatian firms usually calculated cost of capital in their capital budgeting process. Analysis also show low inconsistency of Croatian firm’s capital structures with peaking order theory. The paper shows that Croatian firm’s employ debt in their capital structure close to the debt equity ratio 1:1, with the significant portion of trade credit and short term bank credits. This short term liabilities are greater than 60% of total used debt in analyzing firms. Finally, paper shows that with degree of using the cost of capital in capital structuring rise profitability of analyzing firms.

Keywords: cost of capital; capital structure; profitability; leverage (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://utmsjoe.mk/files/Vol.%205%20No.%202/2-3-Orsag-Mitar(1).pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:utmsje:0108

Access Statistics for this article

UTMS Journal of Economics is currently edited by Prof. Ace Milenkovski, PhD

More articles in UTMS Journal of Economics from University of Tourism and Management, Skopje, Macedonia Contact information at EDIRC.
Bibliographic data for series maintained by Assistant Professor. Dejan Nakovski, PhD ().