Optimization of the structure of corporate capital throughout the lifecycle of a company

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Authors:

N.V.Korzh, Dr. Sc. (Econ.), Assoc. Prof., Vinnytsia Trade and Economics Institute of Kyiv National University of Trade and Economics, Ukraine, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

ORCID ID 0000-0002-4901-3078

Abstract:

Purpose. To define the transformation of corporate capital structure during a company’s lifecycle and to substantiate optimal directions of its development, taking into account the priorities of individual components of corporate capital.

Methodology. Methods of scientific abstraction, structural analysis and statistical analysis are used.

Findings. Features of functioning of mechanical engineering companies and capital structure at various stages of lifecycle and basic processes of corporate capital management were substantiated to identify stages of corporate lifecycle, aiming at defining differences in capital structure.

The following criteria for the formation of corporate capital management system of mechanical engineering companies at every stage of their lifecycle can be distinguished:

- proper liquidity ratio, as a property to generate a positive cash flow in operations;

- the level of investment risks which determines requirements for profitability;

- the availability of optimal capital structure, which helps increase capital profitability.

It is recommended using systems approach, based on matching of the components of the “triad system”:

1) goals that determine the purpose of creation and existence of a company and its component;

2) activity in different forms and displays (functional tasks, processes etc.) that ensures the achievement of its goals;

3) organizational structure that defines the composition of an organization and interrelations between its separate structural subdivisions.

Decomposition of system goals, technologies, control objects and goals of the second level from the point of view of separate components of a mechanical engineering company’s corporate capital, which can be measured, was performed. The decomposition helped determine the place of each separate constituent part of corporate capital in the process of the development of a corporation’s lifecycle together with their goals and development tasks; the possibilities of the development of corporate capital components; tasks in the process of the development of corporate capital in general.

Originality. A theoretical and methodological approach to the determination of the desired corporate capital structure was developed in accordance with strategic directions of an engineering corporation’s development due to the substantiation of priority forming components of corporate capital.

Practical value. The combination of the lifecycle theory with the money management theory made it possible to create a methodology for corporate asset management. This will ensure the necessary changes to transform its structure, achievement of strategic purposes of corporate management in view of the stage of a company’s lifecycle.

References

1. Ivanchenko, Н.V., 2016. Rational of algorithm of formation of knowledge management system in the region. Efektyvna ekonomika, [e-journal] 11, Available at <http//www.economy.nayka. com.ua>.

2. Korzh, N.V., 2014. Structuring of corporate capital, Economic Annals-XXI. Naukovyy zhurnal, 11‒12, pp. 113‒116. Available at: http: // soskin.info/userfiles/file/2014/1112_2014/Korzh.pdf.

3. Fedulova, I.V. and Korzh, N.V., 2015. Corporate capital management on the life-cycle positions. In: Cherevko, O.I., ed., 2015. Collected scientific works, Kharkiv, KSUFTT, 1(21), pp. 343‒358.

4. Popov, A.Y., 2012. Normative Arrangement of Corporate Relations is in a Joint-Stock Company, Business-inform, 10, pp. 235‒238.

5. Sharco, V.V., 2012. Tools of mechanism of industrial enterprise’s production intensification. Economic Annals-XXI. Naukovyy zhurnal, 9‒10, pp. 70‒73.

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Registration data

ISSN (print) 2071-2227,
ISSN (online) 2223-2362.
Journal was registered by Ministry of Justice of Ukraine.
Registration number КВ No.17742-6592PR dated April 27, 2011.

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