Improving the methods to assess the investment attractiveness of fast-growing companies

Abstract

Listen

Translate article

Subject. The article addresses accounting and analytical support for assessing the investment attractiveness of fast-growing companies, having social and economic significance for countries of the world. Objectives. The aim is to improve the accuracy of investment valuation under discounted cash flow method by adding expert adjustments to financial models. Methods. The study employs logical and systems approaches, methods of comparative and investment analysis. A significant stage of the research was building a financial model based on the discounted cash flow method. The results of the study are presented in a tabular form. Results. I formulated my own definition of fast-growing companies, identified specific features of this group of companies that should be taken into account when assessing investment appeal. The paper reveals the main reasons for attractiveness of shares of fast-growing companies for potential investors and possible risks of investing in shares of such issuers, analyzes the dynamics of revenue as a significant component for building an estimation model under the discounted cash flow method, developed a predictive coefficient of revenue dynamics of fast-growing companies, which was used to assess the investment attractiveness of Detsky Mir company. Conclusions. The advantages of using the predictive coefficient of revenue dynamics in the context of assessing the investment attractiveness of fast-growing companies may be a more realistic revenue dynamics, and, therefore, a more conservative outcome of the investment assessment, consideration of the life cycle of fast-growing companies in general and the specifics of sectoral revenue dynamics. Disadvantages include the complexity of calculations to determine the coefficient and the need for statistical database for several subsequent periods.