Zero capital depreciation point for Ukrainian commercial organizations

Abstract

The problem of capital shortage for Ukrainian commercial organizations has been clarified, which makes the theoretical and methodological provisions of its increase and preservation relevant. Insufficient capital for investment processes is a significant obstacle to the development of most business entities in Ukraine. The analysis of recent research and publications on the topic of the work showed that the issues of tools for estimating the point of zero depreciation of equity for Ukrainian commercial organizations still have room for improvement. The aim of the work is to substantiate the tools for estimating the point of zero depreciation of equity for Ukrainian commercial organizations. The main source of compensation for the depreciation of equity due to inflation and devaluation of the national currency is the profit of the organization. The return on equity is a relative indicator that characterizes the degree of appropriate compensation. The tools for estimating the point of zero depreciation of equity should be considered as such a value of return on equity, which compensates for its depreciation due to various factors. Due to the need to divide the factors of impairment of equity into two groups, the use of two types of zero depreciation points is justified: Cash and alternative. As a widely used alternative to the use of equity for the average investor, investing in shares of ETFs is justified, completely repeating the US stock index S and P-500 with a long-term efficiency of 9.5% per annum in US dollars. Approbation of the presented valuation tools allowed us to determine that for Ukrainian commercial organizations the alternative point of zero depreciation of equity is 26.9% and cash-17.6%. It is specified that the average enterprise in the country does not reach the level of even a cash point. There are a limited number of economic activities in the country where the cash point of zero depreciation of equity is exceeded. Reducing inflation to 7-6% per year along with the stabilization of the national currency will bring a significant number of economic activities in the country to the level of reaching the cash point of depreciation of equity.