RESEARCH PAPER
STRUCTURE OF CAPITAL IN THE EVALUATION OF THE PROFITABILITY OF ENTERPRISES IN THE MEAT PROCESSING SECTOR IN POLAND
 
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Szkoła Główna Gospodarstwa Wiejskiego
Acceptance date: 2014-09-22
Publication date: 2014-09-22
 
Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics 2014;340(3):136–153
 
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ABSTRACT
The objective of the article was to identify the relationship between structure of capital and profitability of the enterprises in the meat processing sector. The research pointed to the nega-tive linear relationship between index of capital structure and return on assets and return on sales. It was also found that the relationship between the return on equity and capital structure ratio is non-linear in nature. It was also noted, due to the diagnosed paradox, that ROE ratio is not the proper measure of enterprise's success. Identified parabolic relationship between structure of capital and return on invested capital and degree of financial leverage suggests the possibility of identifying an optimal structure of capital. During the research it was also found that the cost of equity depends on the structure of capital, as well as the annual interest rate.