Proceedings

includes the value related to financial expenses with the interest that the company
must constantly bear from the moment it used the credit lines.
So, borrowing involves a change in the results, thus leading to changes in financial
risk. Financial risk arises from the presence of financial expenditure that remunerates
borrowed capital (interest on loans).
Financial risk or capital risk looks over financial structure and depends on the
financing of the activity: if it is financed solely by equity, financial risk is not present.
Financial risk appears when funding from borrowed sources involving charges for
payment of debts (interest) which affect the profitability of the enterprise.
The crisis has manifested itself in full effect in 2008-2009 affecting capital market
development both nationally and internationally. This led to declines in most listed
companies’ stock quotes. For investors it is important to pursue all necessary
information concerning the development or liquidation of their portfolio, market
development being a crucial factor. Investors have watched the evolution of capital
market crisis even before the event took place, observing also the evolution of the
financial risk of companies on which they had assets, correlated with the development
of stock market indicators.
1. LITERATURE REVIEW
The issue of financial leverage is represented initially in the theories presented by
Modigliani and Miller. They tried to identify an optimal value of financial leverage to
enable an increase in company value, concluding ultimately that the two independent
variables have no relationship.
In 1958 Modigliani and Mill have theorized that firm value is independent of capital
structure. Later, Myers and Majluf (1984), Fama and French (2002) showed the
impact of taxation on capital structure and the value of the company, promoting the
idea of asymmetric information and agent costs. (Triandafil, C, 2007)
The financial leverage impact on investors` perception on a specific company caused
contradictions between theories issued by various theorists. Thus it was found out that
leverage is a positive sign for investors, especially in light of the fact that only one
company with good financial results will be able to attract external financial
resources. (Ross, S, 1977)
Other theorists have noted that the lever can have a negative impact on potential
investors because by indebtement the company tends to become riskier. Another point
of view was that when the firm used external financing resources, operational cash
flow was not sufficient to cover financial obligations. (Miller, M. and Rock, K., 1985)
2. THE IMPORTANCE OF DETERMINING THE LEVEL OF FINANCIAL
RISK IN PASSENGER ROAD TRANSPORTATION
Financial risk analysis in the area of passenger transport is and will remain of great
importance, because there will always be the need of individuals to move in the
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