Economy, finances, management: Topical issues of science and practical activity

MAKOGON Vitaliy  -  PhD in Economics, Associate Professor of the Department of Finance, 

Kharkiv National Agrarian University name after V.V. Dokuchaiev (62483, Kharkiv  region, post office 

Dokuchaevskoe-2, e-mail: witmak.ua@gmail.com).

HOROKH Aleksandr  –  PhD in Economics, Associate Professor, Dean of the Faculty of 

Accounting and Finance, Kharkiv National Agrarian University name after V.V. Dokuchaiev (62483, 

Kharkiv region, post office Dokuchaevskoe-2, e-mail: gorohsasha82@gmail.com).

BRIK Svitlana  -  PhD in Economics, Associate Professor of the Department of Economic Analysis 

and Accounting, National Technical University «Kharkiv Polytechnic Institute» (61000, Kharkiv, 

Kyrpychova st., 2; e-mail: svetsvb@gmail.com).

The development of the agrarian sector of the economy essentially depends on the level of its credit 

support. The conducted studies have shown that effective use of credit resources to finance the production 

costs of agricultural products manufacturers is possible only if the law of diminishing returns is taken into 

account. The testing of the classic approach on the example of the agricultural enterprises to determining 

the effect of financial leverage as one of the main indicators of the efficiency to use the borrowing capital 

has shown that it does  not take into account the effect of the law of diminishing returns and may lead to 

erroneous conclusions regarding the appropriateness of using short-term loans to finance operating 

expenses. The developed methodical tools allowed establishing the reduction of the optimal level of 

production intensity of certain types of agricultural products with the use of the borrowed funds compared 

with the financing option solely at the expense of their current assets. The size of the optimal level reduction 

of production intensity under the condition of using credit resources depends on the level of the interest 

rates. The higher the interest rates the greater the reduction of the optimal level of intensity. It has been 

established that the optimal level of production intensity under the condition of financing expenses by the 

own and borrowed capital does not depend on the coefficient of financial leverage (the ratio of the own 

and borrowed capital). The developed methodical tools allow to determine the amount of the borrowing 

capital that does not reduce the amount of the expected profits in comparison with what can be obtained 

under the condition of financing only at the expense of the available own funds, but will contribute to a 

significant increase in volumes of commodity products.

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