The issue of financial leverage involving the use of debt in the enterprise's capital structure has been extensively researched in the theory of corporate finance. When shaping the structure of its capital by means of financial leverage, the enterprise should consider the cost of securing external sources of financing and the return on its equity. Additionally, the use of debt financing by the enterprise contributes to the so-called optimisation of its capital structure, which in turn should translate into an increase in the business market value.

The viability of securing external capital may be measured by the economic return on total capital. If the economic return on total capital exceeds the interest paid on external sources of financing, the phenomenon of financial leverage will occur. This is the so-called necessary condition for generating positive financial leverage. Once the above condition for establishing financial leverage has been fulfilled, the purchasing power of equity is increased and reflected in the return on equity rate.

The theory should, however, be set against the results generated by real business entities operating in Poland. Therefore, empirical studies should be aimed at enhancing the knowledge of our economy, attempting to answer the question whether in Poland the phenomenon of financial leverage, so often stressed in theory, does manifest itself in practice.

The analysis of the potential to use debt in order to generate the effect of financial leverage in the years 1997-2000 involved 15 companies from five industries, namely distributors of pharmaceuticals (Polska Grupa Farmaceutyczna, Prosper, ORFE, and Farmacol), telecom operators (Telekomunikacja Polska and Netia), electrical engineering companies (Elektrim, Elektromontaż Export, and Elektrobudowa), construction businesses (Mostostal Zabrze, Exbud Skanska, and Budimex) and metal wholesalers (Impexmetal, Centrozap, and Stalexport).

As mentioned earlier, use of debt to achieve financial leverage may be found viable provided that the necessary condition is fulfilled for its occurrence, i.e. the return on total capital proves higher than the interest charged on external capital. The findings of empirical studies have led to surprising conclusions. The most important of them is that, given relatively high level of interest rates in the Polish economic environment, the necessary condition for financial leverage to occur has not been fulfilled for the majority of examined enterprises (the only exception being Elektrobudowa in 1999 which, however, did not make use of long-term debt financing in the years 1997-2000). This means that the use of external capital in the analysed period failed to generate in the scrutinized enterprises advantageous performance measured by the increase in the return on total capital.

The examined enterprises showing the highest return on total capital could fulfil the condition necessary for generating the financial leverage effect (in addition to Elektrobudowa, the only company to make use of financial leverage in 1999), if the average interest rate on long-term debt were lower by roughly 6.7 percentage points in the years 1997-1999, and by 8 to 13 percentage points in 2000. As it was, in the years 1997-2000 debt financing could not be used in Poland for purposes of optimising enterprises' capital structure against their market value assessment, given the risk of its future decrease in value.