Managing investment attractiveness of a company during a period of high market volatility based on forecasting expectations

Abstract

Evaluation of efficiency of economic and financial activities is primarily based on the financial performance of a company. In the context of the joint-stock companies’ activities, special importance belongs to timely or premature assessment of financial prospects of the activities for increasing the profit and potential of the company. To achieve the goals, it is extremely important to objectively evaluate the elements of innovative strategy of the company considering both internal and external influence as well as the company’s unique circumstances. While assessing a specific situation it is essential to take into account both innovative environment and position and its innovative potential. Financial coefficients which allow analysis of performance are used as the assessment criteria for financial condition. The study in hand suggests creation of a high-precision model based on the variability of statistical forecasting techniques followed by a thorough assessment to identify factors that objectively influence the company’s investment attractiveness. At the initial stage the authors calculated 40 financial indicators of the company quarterly over a seven-year period, and 10 factors of the external environment which were used later for conducting the multicorrelation analysis to select the most correlating with the leading one. This was the share price represented by binary code, where 0 indicates a decrease and 1 indicates an increase. A combination of approaches such as regression analysis, Gaussian processes, cumulative perspective theory and the method of constructing vector measures allowed increasing the accuracy of the model from 89 to 96.7% and identify the basic indicators which could be useful in forecasting the investment attractiveness of the company such as the share of net working capital in assets, the level of real income of the population and return on capital employed.