HOW DO SLOVAK SMALL AND MEDIUM-SIZED ENTERPRISES MAKE DECISION ON SOURCES OF FINANCE?
HOW DO SLOVAK SMALL AND MEDIUM-SIZED ENTERPRISES MAKE DECISION ON SOURCES OF FINANCE?

Summary/Abstract: The traditional financial theory generally presents models and approaches applicablemostly in financial management of large enterprises. Small and medium-sized enterprises arecharacterized by a number of specific features, which significantly differentiates them fromlarge ones and determinates their limited access to appropriate sources of finance. In light ofthese differences and specific features, it is essential to draw particular attention to the decisionmaking on sources of finance in these enterprises which have a more risky profile and are muchmore vulnerable to the business environment and its changes. The paper focuses on the targetdebt ratio of Slovak small and medium-sized enterprises and its relationship with their superiorbusiness objective, size and age. It also examines the factors influencing this area of decisionmaking. The main aim of the paper then is to find out how Slovak small and medium-sizedenterprises make decisions on sources of finance to perform their business activities andidentify the main factors influencing these decisions. According to the results obtained, half ofSlovak small and medium-sized enterprises have set the target debt ratio. It is more present inenterprises tending to prefer growth and development as their superior goal. The weak positiverelationship between the existence of the target debt ratio and the size of an enterprise was alsorevealed. However, the existence of the target debt ratio is not determined by the age of anenterprise. Finally, the most important factors influencing financial decision-making of Slovaksmall and medium-sized enterprises include cost of capital and their long-term survival.

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