DETERMINANTS OF FINANCIAL LEVERAGE: A COMPREHENSIVE APPROACH TO EVALUATION

Abstract

The relevance of the research is determined by the increasing role of debt financing in an unstable market environment and the growing impact of external constraints on the capital structure of enterprises. Companies face the necessity to promptly adapt financial leverage parameters to changing macro-financial conditions, fluctuations in capital availability, and increasing risks. Therefore, there is a need to develop a conceptual model of the determinants of financial leverage. The article is dedicated to the systematization of financial leverage determinants within the capital structure of an enterprise. A number of theories explaining the interaction between equity and debt capital are reviewed, and the factors influencing debt formation are identified. It is established that financial leverage is a dynamic result of the systemic interaction between external environment determinants, which create framework constraints, and internal environment determinants, which form the internal potential of the enterprise. The interaction of these groups of determinants defines the multifactorial nature of financial leverage, allowing for a comprehensive approach to analyzing its dynamics and evaluating its effectiveness. This served as the basis for forming a comprehensive model of financial leverage determinants, which summarizes key interrelations and provides a holistic view of the mechanisms of its formation. A comprehensive view of the interaction of determinants allows financial leverage to be assessed not only as a static result of optimizing capital structure but as a dynamic process that constantly adapts to the internal needs of the enterprise and changes in the external environment. The model eliminates the fragmentation of traditional approaches, providing a systematic understanding of how various groups of factors influence the capital structure, thereby determining the level of financial leverage. As a result, the developed conceptual model can be used as a tool for diagnosis and forecasting, enabling the determination of financial leverage parameters. Its application increases the validity of financial decisions, creates opportunities for early risk detection, and facilitates the formation of an adaptive financial strategy focused on achieving both short-term results and long-term effects.