THE EFFECTS OF FINANCIAL LEVERAGE ON BUSINESS OPERATIONS IN THE CONDITIONS OF GEOPOLITICAL CHANGES

Abstract

The subject of the research includes the analysis of financial leverage, the degree of indebtedness and the
ratio of debt and capital of the company in the period 2017-2022, which operate in the electrical industry sector in the
Republic of Srpska. The sample consists of five production companies in the field of electrical industry, namely: a. d.
"Hydroelectric power plants on Trebišnjica", a. d. "Hydroelectric power plants on the Drina", a. d. "Hydroelectric
power plants on Vrbas", a. d. "Gacko mine and thermal power plant" and a. d. "Ugljevik mine and thermal power
plant". Leverage shows the conditions for assessing the effects of business with the presence of financial risks. In this
context, the concept of leverage affects business operations and management decision-making. The research is based
on the analysis of publicly available documentation, i.e. financial reports of companies from the sample for the given
period of analysis. The aim of the research is to assess the effects of financial leverage on the financial performance of
companies. In the changed business environment, risks have increased in the direction of achieving a positive financial
result. Company management must be aware of the importance of financial leverage and its impact on company
operations, in order to readily respond to future revenue growth.