Determining the Influence of Internal Factors on Indebtedness

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Miloš Pjanić
Miloš Đaković
Branimir Kalaš


Indebtedness and its level are one of the most important indicators of the healthy operation of every company. In this study, the authors deal with the analysis of the influence of certain selected internal factors on the level of indebtedness of agricultural enterprises in Serbia. Only large agricultural enterprises were taken as a sample, and the sample itself includes 5702 observations and 87 companies. The subject of the analysis is the annual panel data of large agricultural companies, and the analysis period covers from 2015 to 2021. In the analysis, the authors used the debt-to-asset indicator as a representative of the company's indebtedness, and it represents the only dependent variable. As independent variables, the authors used indicators of general liquidity, return on capital, return on assets, EBIT level, and equity level. The authors used several diagnostic tests to establish the validity of the regression model. To obtain the results, the authors used the POLS model, the fixed effects model, and the random effects model to determine the influence of independent variables on indebtedness. The results indicated the statistical significance and negative impact of indicators of general liquidity, return on capital, and the level of own capital on the level of indebtedness. The contribution of this paper is that it provides an insight into the relationship of certain internal factors to indebtedness, as well as helps in determining the best level of the relationship between the use of debt and own funds in the financing of the company.

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