Abstract:

A company needs appropriate sources – assets for functioning and development. Such assets can be finances from equity capital or outside sources. Assets and its financing sources are reflected in economic entity’s balance sheet assets and liabilities. Their internal structure and relations have significant impact on company’s safety, which is why they are subjected to in-depth assessment within financial analysis. However, it is not an ideal tool. It does not give a recipe for success, it rather proposes certain schemes, indicate direction of postulated changes, but, despite of continuous development, it still creates more questions than answers. The author of this article seeks answers to the following questions: What should be the capital structure of a company? Is using averaged industry data enough for such analysis?

The aim of this article is drawing attention to the importance of company’s balance sheet components’ structure in the context of widely understood risk of business activity, as well as to industry comparisons used in these analyses. Sector/industry data, in the form of average indicators characterising a certain group of companies, are often used as a reference base for assets structure, and such comparisons, in extreme cases, can lead to wrong interpretations and conclusions. Against all appearances and often made a priori assumptions, companies representing a certain industry, do not have to be similar and the group does not have to be homogenous.