WACC as the Minimization Criterion of Liability Management in a Company Capital Structure Optimization

Abstract:

In our study we concern with the quantification of the weighted average cost of capital, as the minimization criterion for the company capital structure optimization. To achieve more accurate estimation of the costs of capital we calculated them using four models with weights assigned on the basis of their explanatory power of the particular company. In the next step, the possibility of application of individual models and their explanatory power in the countries with poorly developed capital markets, where the necessary data for the calculations absent and there is the impact of the financial crisis, is determined. Our aim in further research is to design company liability management methodology which contains other optimization criteria.

• Periodical: Advanced Engineering Forum (Volume 13)
• Pages: 317-323
• DOI: https://doi.org/10.4028/www.scientific.net/AEF.13.317
• Online since: June 2015
• Authors: Jaroslav Jaroš*, Vlastimil Melichar, Libor Svadlenka
• Keywords: Beta Coefficient, Capital Market, Capital Structure Optimization, Cost of Capital, Model CAPM

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