Economics and management of enterprises

The energy-saving projects’ impact on the level of an enterprise’s financial stability

Economic Annals-XXI

Economic Annals-XXI: Volume 195, Issue (1-2), Pages: 36-49

Citation information:
Al Sharari, F., Yemelyanov, O., Dziurakh, Yu., Sokil, O., & Danylovych, O. (2022). The energy-saving projects’ impact on the level of an enterprise’s financial stability. Economic Annals-XXI, 195(1-2), 36-49. doi: https://doi.org/10.21003/ea.V195-04

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Fayez Al Sharari
PhD,
Associate Professor,
Department of Administrative and Financial Sciences,
Al-Balqa Applied University
Al-Salt, 19117, Jordan
fayiz.sharari@bau.edu.jo
ORCID ID: https://orcid.org/0000-0003-2299-7342

Olexandr Yemelyanov
D.Sc. (Economics),
Associate Professor,
Department of Business Economics and Investment,
Lviv Polytechnic National University
12 Stepan Bandera Str., Lviv, 79013, Ukraine
oleksandr.y.yemelianov@lpnu.ua
ORCID ID: https://orcid.org/0000-0002-1743-1646

Yurii Dziurakh
PhD (Public Administration),
Associate Professor,
Department of Administrative and Financial Management,
Lviv Polytechnic National University
12 Stepan Bandera Str., Lviv, 79013, Ukraine
yurii.m.dziurakh@lpnu.ua
ORCID ID: https://orcid.org/0000-0001-7131-7468

Oleh Sokil
D.Sc. (Economics),
Professor,
Department of Administrative and Financial Management,
Lviv Polytechnic National University
12 Stepan Bandera Str., Lviv, 79013, Ukraine
sokil.oleg@ukr.net
ORCID ID: https://orcid.org/0000-0002-3121-826X

Olena Danylovych
PhD Student,
Department of Business Economics and Investments,
Lviv Polytechnic National University
12 Stepan Bandera Str., Lviv, 79013, Ukraine
olena.t.danylovych@lpnu.ua
ORCID ID: https://orcid.org/0000-0002-3313-6276

The energy-saving projects’ impact on the level of an enterprise’s financial stability

Abstract. The article developed and tested tools for assessing the impact of debt financing of energy saving projects on the financial sustainability of those enterprises that implement these projects. In particular, an indicator for assessing the level of financial stability of business entities is proposed. The calculation of this indicator is based on a comparison of the forecast value of the flow of income of the enterprise, which it can use to fulfill its obligations to creditors, with the minimum allowable value of this flow, at which these obligations will be guaranteed to be fulfilled by the enterprise. A model for assessing the impact of debt financing of energy saving measures at enterprises on the level of their financial stability has been developed. Analytical expressions have been established for the limiting values of the part of the loan financing of energy-saving projects, under which the financial stability of the enterprise after the implementation of these projects will not decrease or will be at the minimum acceptable level. This made it possible to identify the conditions under which the introduction of investment measures at enterprises aimed at improving energy efficiency leads to an increase in the level of financial stability of business entities. These conditions provide for a limitation on the share of borrowed funds in the structure of sources of financing for energy saving projects, taking into account the forecast values of return on investment and other indicators that affect the ability of enterprises to fulfill their loan obligations in a timely manner. An empirical analysis was carried out on a sample of Ukrainian enterprises belonging to three types of economic activity. This analysis showed, in particular, that an increase in the investment activity of enterprises in the field of energy conservation has a positive impact on their level of financial stability. It was also found that the increase in the share of debt financing of energy-saving projects, to a certain extent, negatively affected the financial stability of the enterprises that implemented these projects. However, at any level of debt financing, the implementation of energy-saving projects made it possible to increase the average financial stability of the companies under study.
The purpose of the article is to develop and use tools for assessing the impact of debt financing of energy saving projects on the financial sustainability of those enterprises that implement these projects.

Keywords: Energy Saving Project; Debt Financing; Enterprise; Financial Stability; Investment Activity; Energy Saving

JEL Classification: G30; G31; Q39; M21

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

Data Availability Statement: The dataset used is publicly available from the sources referred to in the paper.

DOI: https://doi.org/10.21003/ea.V195-04

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Received 20.10.2021
Received in revised form 22.11.2021
Accepted 26.11.2021
Available online 9.02.2022

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