scholarly journals Mathematical Model of Economical Assessment of Investments in Information Provision for the Management System of a Modern Company

2019 ◽  
Vol 62 ◽  
pp. 11002
Author(s):  
A.V. Korablev ◽  
M.V. Petrushova ◽  
E.V. Pogorelova ◽  
A.G. Abrosimov
Keyword(s):  
Mathematical Model ◽  
Management System ◽  
Business Processes ◽  
Net Present Value ◽  
Information Provision ◽  
Cash Flows ◽  
Financial Indicators ◽  
Investment Projects ◽  
Day To Day Operations ◽  
The Relationship

Information provision for a company’s management system not only provides data for evaluating day-to-day operations but also is an efficient tool for improving the reliability of the entire management system. For purposes of efficiently managing projects for implementing modern information provision, the company should design a formalized model for assessing the relationship between project-related financial costs and the number of automated business processes in place at the company. This paper proposes using a mathematical model that contains financial indicators such as net present value, cash flows, and discount rates. Thanks to lower investment risks, the model will improve the economic efficiency of investment projects as part of implementing information provision at the company.

scholarly journals Policy Assessment Investment Appeal of Innovation Projects Enterprises

2019 ◽  
Vol 9 (2) ◽  
pp. 5111-5122
Keyword(s):  
Regression Analysis ◽  
Practical Experience ◽  
Cash Flows ◽  
Financial Indicators ◽  
Correlation And Regression Analysis ◽  
Proposed Model ◽  
Modern Economic ◽  
The Subject ◽  
The Relationship ◽  
Future Cash Flows

The aim of the article is to summarize theoretical principles and practical experience regarding the relationship between the investment attractiveness of innovative projects and economic growth. The methods of correlation and regression analysis, extrapolation and modeling are used. The subject of the study was the features and patterns of the formation, use and regulation of the policy for assessing the investment attractiveness of company’s innovative projects in modern economic conditions. In the course of the study, an algorithm was developed to assess the size and level of investment attractiveness of the algorithm is based on the allocation of components of the enterprise’s potential. It is indicated that models for evaluating efficiency and cost should take into account not only future cash flows, but also non-financial indicators. Are proposed the construction of a multivariate model based on regression analysis. The essence of this model is to combine the traditional method of correlation analysis with least squares. This approach has the main advantage - relatively high accuracy and low costs in the construction and forecasting. The proposed model of a system for ensuring the investment attractiveness of innovative projects of companies consists of two main subsystems - information-analytical and implementation-control. These blocks provide results that allow you to increase investment attractiveness, as well as timely determine the external and internal risks of the enterpriseThe aim of the article is to summarize theoretical principles and practical experience regarding the relationship between the investment attractiveness of innovative projects and economic growth. The methods of correlation and regression analysis, extrapolation and modeling are used. The subject of the study was the features and patterns of the formation, use and regulation of the policy for assessing the investment attractiveness of company’s innovative projects in modern economic conditions. In the course of the study, an algorithm was developed to assess the size and level of investment attractiveness of the algorithm is based on the allocation of components of the enterprise’s potential. It is indicated that models for evaluating efficiency and cost should take into account not only future cash flows, but also non-financial indicators. Are proposed the construction of a multivariate model based on regression analysis. The essence of this model is to combine the traditional method of correlation analysis with least squares. This approach has the main advantage - relatively high accuracy and low costs in the construction and forecasting. The proposed model of a system for ensuring the investment attractiveness of innovative projects of companies consists of two main subsystems - information-analytical and implementation-control. These blocks provide results that allow you to increase investment attractiveness, as well as timely determine the external and internal risks of the enterprise

scholarly journals Effects Of Key Financial Indicators On Earnings Management In Korea’s Ready Mixed Concrete Industry

2017 ◽  
Vol 33 (2) ◽  
pp. 329-342 ◽  
Author(s):  
Geun Bae Jang ◽  
Weon-Jae Kim
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Accounting Information ◽  
Cash Flows ◽  
Financial Indicators ◽  
Ability Level ◽  
Operating Income ◽  
The Relationship ◽  
Ready Mixed Concrete ◽  
Mixed Concrete

Earnings management is the practice of deriving certain benefits by intervening in external financial reporting or misleading certain stakeholders through adjustments to accruals without cash flow involvement or with affecting cash flows through real activities. Using the models of Kothari et al. (2005) and Cohen et al. (2008) for accrual-based earnings management (AEM) and real activities earnings management (REM), respectively, we examined whether relationships exist between key financial indicators, such as cash flows from operations, operating income, and debt dependency level, and AEM and REM in the ready mixed concrete (RMC) industry in Korea. This study is the first to investigate earnings management in Korea’s RMC sector. Results showed that operating income and cash flows from operations are significantly negatively related to AEM and REM, consistent with the findings of previous research. By contrast, debt dependency exhibits no significant relationship with AEM and REM, contradicting the findings of most previous studies. As a moderating variable, operating income affects the relationship between cash flows from operations and earnings management with only REM. On these bases, we can infer that earnings management in the Korean RMC industry responds differently to key financial indicators with regards to AEM and REM practice. Overall, companies in the industry implement aggressive earnings management depending on operating income and cash generation ability level rather than debt dependency level. These findings provide important insights for people who are interested in accounting information on the RMC industry in Korea.

scholarly journals Economic-Mathematical Model for Assessing the Sensitivity of International Innovation and Investment Projects

2019 ◽  
Vol 8 (12) ◽  
pp. 140-145
Keyword(s):  
Mathematical Model ◽  
International Business ◽  
Economic Efficiency ◽  
Net Present Value ◽  
Present Value ◽  
Investment Activity ◽  
Investment Projects ◽  
Internal Parameters ◽  
Proposed Model ◽  
Sensitivity Indicator

International innovation and investment activity occupy a special place in the system of modern international business. The authors propose an economic and mathematical model for assessing the sensitivity of international innovation and investment projects by the criterion of net present value. It is advised to use the obtained sensitivity indicator as an additional one in assessing the economic efficiency of international innovation and investment projects of an enterprise. The proposed model makes it possible to determine the effect of several internal parameters simultaneously on the net present value of the project.

The Weitzman Argument

2012 ◽  
Author(s):  
Christian Gollier
Keyword(s):  
Discount Rate ◽  
Opportunity Cost ◽  
Net Present Value ◽  
Cost Of Capital ◽  
Cash Flows ◽  
Simple Rule ◽  
Rate Of Return ◽  
Net Benefit ◽  
Investment Projects ◽  
Net Benefits

This chapter examines a model in which the exogeneous rate of return of capital is constant but random. Safe investment projects must be evaluated and implemented before this uncertainty can be fully revealed, i.e., before knowing the opportunity cost of capital. A simple rule of thumb in this context would be to compute the net present value (NPV) for each possible discount rate, and to implement the project if the expected NPV is positive. If the evaluator uses this approach, this is as if one would discount cash flows at a rate that is decreasing with maturity. This approach is implicitly based on the assumptions that the stakeholders are risk-neutral and transfer the net benefits of the project to an increase in immediate consumption. Opposite results prevail if one assumes that the net benefit is consumed at the maturity of the project.

Purchasing power return, a new paradigm of capital investment appraisal

2018 ◽  
Vol 44 (2) ◽  
pp. 241-256 ◽  
Author(s):  
David DeBoeuf ◽  
Hongbok Lee ◽  
Don Johnson ◽  
Maksim Masharuev
Keyword(s):  
Capital Investment ◽  
Net Present Value ◽  
Capital Budgeting ◽  
Cash Flows ◽  
Purchasing Power ◽  
New Paradigm ◽  
Content Type ◽  
Investment Projects ◽  
Investment Appraisal ◽  
The Many

Purpose The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The expected return, required return structure of the proposed purchasing power return (PPR) methodology eliminates the many flaws associated with the competing internal rate of return (IRR) and modified IRR (MIRR) techniques. Design/methodology/approach The authors provide a new framework for examining long-term investment projects through a percentage return prism. Unlike that of IRR and MIRR, mathematical consistency with net present value (NPV) is a design requirement. Findings PPR eliminates the many flaws found in the IRR and MIRR methodologies, is mathematically consistent with NPV, and identifies positive-NPV investments forecasted to reduce the company’s purchasing power. These projects are acceptable under NPV, but flagged for additional review and potential rejection. Created to examine projects on a percentage return basis, PPR employs market-based inflation rates to convert all cash flows into constant purchasing power units of measure. From these units, an expected real return is estimated and compared to the project’s inflation-adjusted required return, resulting in an accept/reject decision consistent with that of NPV. Originality/value The proposed PPR is a new paradigm of capital investment appraisal that eliminates the many problems found in the IRR and MIRR techniques, is mathematically consistent with the NPV method, and helps financial decision makers examine investment projects on an expected percentage return basis. PPR also flags for further review projects expected to actually reduce the company’s purchasing power.

scholarly journals Information space of the economic management system in the business management system

2021 ◽  
Vol 273 ◽  
pp. 08088
Author(s):  
Еvgenia Muratova ◽  
Elena Kravchenko ◽  
Anna Sukhoveeva ◽  
Olga Andreeva
Keyword(s):  
Mathematical Model ◽  
Management System ◽  
Business Processes ◽  
Business Management ◽  
Information Space ◽  
Economic Management ◽  
Space Model ◽  
Control Actions ◽  
Formalized Description ◽  
The Mathematical Model

The process of possible automation of developing control actions is considered and presented in the article as the mathematical model that shows the economic mechanism of one or more business processes along with the formalized description of management accounting and controlling procedures. As a result, the information space model of the economic management system is obtained which is filled with a set of possible states created.

scholarly journals Methodical approaches to the assessment of investment attractiveness of agricultural enterprises

2019 ◽  
Vol 21 (93) ◽  
pp. 63-69
Author(s):  
R. M. Myniv
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Cash Flows ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Agricultural Enterprises ◽  
Internal Rate ◽  
Dynamic Methods

Evaluation of investment efficiency is central to the process of justifying and selecting possible options for investing in investment projects, and is therefore a key to successful implementation of investment activities of agricultural enterprises. The main directions of financing of investment projects of agricultural enterprises are: purchase or construction of unfinished construction objects, new construction, expansion of existing enterprises, reconstruction of existing enterprises and technical re-equipment of existing enterprises. Two main groups of methods of assessing the cost-effectiveness of investment projects have become most widespread: static and dynamic. Static methods involve the calculation of indicators based on undiscounted cash flows. Dynamic methods, on the contrary, take into account the change in the value of money over time and imply bringing the values of all cash flows to the same period by discounting or compounding. Dynamic methods for assessing the effectiveness of investment projects include the following basic methods that rely on most modern Ukrainian enterprises, such as net present value cash flow (NPV), internal rate of return (IRR), payback period (DPP) and project profitability index (PI). On their basis the basic methods of selection of investment projects of agricultural enterprises are formed. Net Present Value (NPV) calculation. is based on comparing what will be invested in the future with what is invested now. The Profitabale Index (PI) is directly related to net present value and is defined as the ratio of the discounted cash flow to initial investment. The IRR (Internal Rate of Return) is the discount rate at which the projected cash inflows are equal to the project's discounted cash flows. As indicators of the effect in calculating the overall efficiency of investments, it is advisable to use changes in the following values of growth: revenue from the sale of enterprise products; gross income; profit before tax; net profit; cash flow; clean products. Gross and net investment should be included in the costs. The use of qualitative methods in investment analysis is due to the following reasons: the subjectivity of the phenomena or characteristics studied; lack or lack of necessary information; inability to analyze objective and acceptable methods; lack of research object (to be created during project implementation). Quantitative methods for evaluating agricultural investment projects include methods of probability theory and mathematical statistics, as well as economic and statistical methods.

Real Options Models for Maintenance Decision Making for Offshore Jacket Platforms

2005 ◽  
Author(s):  
Sandra Santa-Cruz ◽  
Ernesto Heredia-Zavoni
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Structural Reliability ◽  
Net Present Value ◽  
Investment Project ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Projects ◽  
Financial Variables ◽  
Financial Options

Real options models are currently available as one of the best tools for the assessment of investment projects. This is so mainly due to the capability of the real options models to: (1) account for uncertainties in financial variables that are crucial to the investment project; and (2) quantify the value of the possibility to make a decision on whether to defer, abandon, expand or reduce the project at one or several points along time. Recently, some researchers have proposed the use of real options models for the assessment of infrastructure projects for hydrocarbon exploitation from an economics point of view. The objective of this work is to develop real options models for decision making regarding inspection, maintenance and decommissioning of offshore facilities taking into account the financial and technical aspects of the project. In all cases it is considered that at some point in the future, within the service lifetime of the structure, the decision maker will have an option to carry or not an inspection, and take or not a maintenance or decommissioning action, which will determine the structural and financial performance of the project for its remaining lifetime. The in-service times with no structural failure and the rehabilitation times are modeled as random variables. The cash flows are modeled as stochastic processes considering interruption of operation due to repairs after failure. Analytical expressions are derived for the computation of structural reliability and availability depending upon maintenance actions. An example is given for a jacket platform subjected to fatigue deterioration and damage. Simple and compound options of maintenance and decommissioning options are analyzed. The value of the project is computed by means of an approach similar to that of Black and Scholes for financial options [2]. The results are compared to those obtained under the traditional Net Present Value approach.

scholarly journals Adjusting Time for Uncertain Project Assessment

2016 ◽  
Vol 8 (7) ◽  
pp. 275
Author(s):  
Salvador Cruz Rambaud ◽  
Ana María Sánchez Pérez
Keyword(s):  
Net Present Value ◽  
Investment Project ◽  
Real Data ◽  
Cash Flows ◽  
The Other ◽  
Present Value ◽  
Discount Function ◽  
Project Assessment ◽  
The Relationship ◽  
Empirical Contribution

<p>This paper presents a novel methodology to include the risk when determining the net present value of an investment. More specifically, the risk of cash flows is priced by the delay in the payment of debts not at the initially agreed maturities, but at later dates. To do this, first we recall the classical methods which introduce a certain risk correcting parameter before determining the net present value of the project. The key idea of this new model is to transfer the risk to the time embedded in the expression of the discount function by using a suitable deformation of this parameter. In this way, the risk is measured by the delay in the initially agreed maturity when obtaining the corresponding cash flow. On the other hand, the way to include the risk in a project is based on an adaptation of the Krugman’s curve which describes the relationship between debt maturities and their respective expectations of being obtained. The empirical contribution is based on the use of real data of payment delays corresponding to Spanish companies in 2015. This procedure allows to fit the risk of an investment project from a more realistic perspective and so to determine more accurately its net present value.</p>

scholarly journals The Problem of Determining Discount Rate for Integrated Investment Projects in the Oil and Gas Industry

Mathematics ◽  
2021 ◽  
Vol 9 (24) ◽  
pp. 3327
Author(s):  
Alexey Komzolov ◽  
Tatiana Kirichenko ◽  
Olga Kirichenko ◽  
Yulia Nazarova ◽  
Natalya Shcherbakova
Keyword(s):  
Discount Rate ◽  
Net Present Value ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Cash Flows ◽  
Practical Implementation ◽  
Gas Industry ◽  
Investment Projects ◽  
Integrated Project ◽  
Methodological Approaches

The main aim of this paper was to examine specific approaches to determining the discount rate for comprehensive computation of investment projects efficiency in the oil and gas industry. The objective of the study was to develop a scientific approach for determining the discount rate for integrated oil and gas projects. The authors analyze dynamic methods for determining the efficiency of investment projects in the oil and gas industry and conclude that they are advisable for oil and gas projects due to the high capital intensity of the projects and their long payback period. Regarding the need to implement dynamic indicators of efficiency, the authors set the task of deter-mining the proper discount rate as a factor having a significant impact on effectiveness evaluation. The discount rate is proposed to be evaluated by solving the equation and finding the break-even point where the NPV (net present value) of the integrated project will be equal to 0 (taking into account the revenue of the subprojects included in the complex). The practical implementation of methodological approaches to assessing the discount rate for integrated projects is relevant due to the execution of large, systemically important and integrated projects. As a result of the study, the authors put forward a methodological algorithm for determining the discount rate of an integrated project which assumes an assessment of cash flows for the subprojects included in the complex; determination of the target rate of return for subprojects; and calculation of prices for products at which a complex project become break-even. The practical implementation of methodological approaches to assessing the discount rate for integrated projects is relevant due to the execution of large systemically important integrated projects.

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