Abstract
The article discusses the entropy approach to the analysis of corporate financial system on the basis of the financial coefficients and market share price rates. The uncertainty of the corporate financial attractiveness is assessed using the entropy indicator of a random vector. Financial indicators such as Liquidity Financial Ratios, Operating Financial Ratios, Leverage Financial Ratios, Profitability Financial Ratios and Market Ratios serve here as vector components. Discrete entropy models of random vectors as well as differential entropy models for continuous probability distributions were used. It is shown that special probability distributions, approximately coinciding with the basic statistical ones for the first two moments, set the boundary of the maximum differential entropy. The entropy indicators were calculated based on the probability and entropy measures.
Highlights
At the present time economic-mathematical methods and models are efficiently applied in corporate financial controlling for business analysis and forecasting.The beginning of the information theory was connected with the Claude E
The results of the calculations of the above entropy indicators: H0 X * - the entropy of the random vector X *(X1, X3, X4) that characterises the structural entropy of the corporate financial ratios; H1(X5) - the entropy of the random variable X5, which is the corporate financial attractiveness indicator (ROC)
The entropy indicators can be applied to the integrated numerical evaluation of the companys investment attractiveness
Summary
At the present time economic-mathematical methods and models are efficiently applied in corporate financial controlling for business analysis and forecasting. As the information theory is a mathematical theory there were various attempts to use it in different sciences. A.N. Kolmogorov determined a close relationship between the theory of probability and the metric theory of functions that enabled to use different types of entropy metrics for the description of any formalized structures [1]. The Hurst fractal statistics is a single factor characteristic related only to the value of the stock. The entropy approach in economic-mathematical modeling has no limitations concerning two-moment distributions that are usually required for the regression analysis, correlation analysis, dispersion analysis as well as factor analysis in finance. The entropy model analysis can be regarded as one of the advanced methods of the corporate financial analysis
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