Optimization Problem of Increasing the Financial and Economic Efficiency of an Enterprise Based on the Application of the Internship Mechanism

The infrastructural component of Russia’s scientific and technological development requires a significant update of the methodology for evaluating the relevant investment projects. The article covers the issue of simultaneous assessment of financial and economic efficiency of research infrastructure projects and justification of the need for government participation for successful implementation of such projects. The suggested methods and models are based on the transition from financial to economic indicators of the project through the adjustment of cash flows, identification of public effects significant for such projects (social, environmental, indirect, price, tax), and allocation of synergistic effects in their composition. These methods and models were tested for the innovative project of the Center for Collective Use “Experimental Catalyst Production”, which was proposed by the Institute of Catalysis in 2018 within the framework of the Novosibirsk regional programme “Akademgorodok 2.0”. The results show that the stimulation of investment in research infrastructure is justified by a significant excess of the project economic efficiency compared to its financial efficiency and it significantly depends on the choice of an adequate mechanism for government support

SummaryThe relationship between financial decentralization and economic efficiency has been a hot topic in the recent years. Modern enterprises, especially smart manufacturing enterprises, compared to traditional enterprises, have quantities of distinctive attributes. Given this situation, it is worthy of studying what role the financial decentralization plays in improving economic efficiency of both state‐owned and private enterprises. In this paper, a mathematical model is built and utilized to explore the determinants of financial decentralization and the relationship of financial decentralization and economic efficiency. Specifically, the model is extended from the overlapping generations model (OLG), and the first order condition is taken into account to maximize corporate profits and personal utility and to deduce the channels through which financial decentralization affects economic efficiency. Results show that financial decentralization is related to the size of the population employed by the private economy and it contributes to enhancing economic efficiency by affecting the capital efficiency of private companies and the capital quota of private enterprises. This paper theoretically enriches the literature on the factors of economic efficiency and has significant implications in economic efficiency.

An important factor in determining the success of a small-scale broiler farm is its economic viability and efficiency. During times of trouble for the industry, the idea receives more attention. The conceptual considerations of economic sustainability and efficiency are frequently quite constrained, according to the difficulties raised in this study and by other authors. There is a lack of information about South Africa’s small-scale broiler production’s economic viability and effectiveness. Furthermore, it is clear that small-scale broiler producers have the ability to increase their economic efficiency. By reducing the mortality rate, feed conversion rate, and production duration, both their technical and financial efficiency could be improved. Profitability in the production of broilers will be considerably increased by lowering the cost of these variable inputs, particularly feed and day-old chicks. Additionally, raising the education level, capacity utilization ratio, and broiler production would all contribute to raising the farms’ efficiency levels. To ensure effective resource use and to maximize practicable profit, small-scale broiler producers who are not operating close to the profit frontier must make efforts to reduce both technical and allocation inefficiencies. Collectively, all these measures would ensure the economic sustainability of small-scale farmers in South Africa would be met. Moreover, the sustainability of small-scale broiler producers can be achieved if strategies that build local capacity and that empower them to sustain high levels of productivity are provided. In addition, the efficient use of resources will ensure that productivity is enhanced, and might increase profitability. It is therefore important to ensure that small-scale broiler producers achieve maximum profit for a given set of inputs. Approaches in assessing the farm-level profitability such as cost-benefit and gross margin analyses can be used.

The impact of macroeconomic variables on the financial market efficiency has been a hot topic for decades. Thus, this study investigates the effect of oil price changes on the financial market performance using the estimation of Auto-Regressive Distributed Lag (ARDL) technique in Saudi Arabia for the period 1980-2018. The results revealed a long-run causality between the exchange rate, return on investment, and oil prices towards the financial market efficiency. However, only inflation and return on investment have causality effects on financial market efficiency in the short run. In addition, the exchange rate and oil price do not have causality running to economic market efficiency. Thus, both the short-run and long-run causality effects should be considered as guidelines to be followed by policymakers to avoid any misleading macroeconomic strategies in future strategic planning. The speed of adjustment reported from estimating the Conditional Error Correction Regression is (-0.114527). Also, the model was found stable from using both the CUSUM and CUSUMQ statistics.

The allocation of limited capital to a variety of assets available is one of the important problems in financial management. It is actually a constrained multi-objective optimization problem called portfolio selection. Most studies have been made to solve the problem with single-objective optimization techniques by aggregating conflicting and incommensurate objectives into a single one. The solutions obtained may be unsatisfactory because their nondominance is not guaranteed, especially when some practical constraints, such as cardinality constraints, are incorporated into the portfolio optimization models. This paper presents an evolutionary multi-objective optimization technique, which called Knapsack Multi-Objective Particle Swarm Optimization (K-MOPSO) to generate the efficient portfolios in terms of expected return and variance under short sales and/or cardinality constraints. Finally, a Multi-Attribute Decision Making (MADM) method named Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) is employed to outrank the efficient portfolio that decision makers satisfy most.

Against the backdrop of profound changes in the global economic landscape and intensifying regional development imbalances, exploring the impact of regional cultural differences on the evolution of financial structure and economic growth efficiency has important theoretical value and practical significance for promoting regional coordinated development and high-quality economic transformation. Based on the theory of institutional embeddedness and financial development theory, this study constructs a theoretical analysis framework that includes cultural differences, financial structure and economic growth efficiency. Using China's provincial panel data from 2000 to 2023 and adopting spatial econometric methods, this paper systematically examines the transmission mechanism by which regional cultural differences affect economic growth efficiency by influencing the choice of financial structure. The study found that: first, regional cultural differences significantly affect the marketization degree of financial structure, and regions with stronger risk aversion tendencies are more dependent on bank-dominated financial structures; second, there is a significant spatial spillover effect between financial structure and economic growth efficiency, and a financial structure with a higher degree of marketization helps to improve regional economic growth efficiency; third, regional cultural differences have an indirect effect on economic growth efficiency by influencing the choice of financial structure, and this effect shows significant heterogeneity at different stages of regional development. This study provides new theoretical perspectives and policy implications for deepening financial supply-side structural reform and promoting regional coordinated development.

The purpose of this study is to deepen the understanding of the concept of Economic Value Added (EVA) and to develop an improved comprehensive indicator for evaluating the financial and economic performance of enterprises. The Profit-Payment Ratio (PPR), proposed in the article, provides a more precise reflection of the relationship between economic efficiency and the cost of capital. To achieve the research objectives, the methods of scientific abstraction, logical generalization, critical analysis, comparative analysis of financial indicators, a structural-decomposition approach, and economic- mathematical modeling to analyze the impact of liquidity and solvency on enterprise performance are employed in the study. The Profit-Payment Ratio (PPR), as proposed, addresses the limitations of the traditional EVA indicator, particularly its abstract nature and misalignment with the realities of financial analysis. The PPR integrates the economic and financial outcomes of an enterprise's activities, capturing not only profit and capital charges but also the influence of such factors as liquidity, solvency, goodwill, and other significant aspects. Unlike EVA, this new metric accounts for the entire system of financial and economic conditions surrounding the enterprise. The Profit-Payment Ratio enables enterprises to assess their financial and economic performance with consideration of a broader range of variables, making it a useful tool for managing financial and economic activities. It facilitates more informed decision-making regarding capital utilization, asset management, and the achievement of strategic goals. This new approach also allows for better adaptation of performance evaluation to a dynamic market environment, as it considers both positive and negative shifts in economic and financial outcomes and the interrelation between economic and financial efficiency. The research identifies the main drawbacks of using EVA, such as its abstract nature and limited connection with negative financial and economic trends. The proposed Profit-Payment Ratio offers a more precise assessment of an enterpris’s financial and economic results by integrating profit, capital charges, and the effects of factors such as liquidity and solvency, making it an effective tool for strategic planning.

This study investigates the impact of financial openness and economic efficiency on foreign direct investment (FDI) inflows across 30 Chinese provinces from 2005 to 2019, addressing regional disparities through a variety of statistical models. Unlike previous studies that primarily focus on cross-country comparisons, this research emphasizes the nonlinear relationships between financial openness, economic efficiency, and FDI within a regionally diverse context. The findings reveal that (1) financial openness significantly boosts FDI only after surpassing a critical threshold, a level that many provinces—particularly in Central and Western China—have yet to achieve. To address this issue, these regions should prioritize financial reforms, infrastructure improvements, and the establishment of free-trade zones. (2) Economic efficiency exhibits a U -shaped relationship with FDI, indicating that only when efficiency exceeds a certain level can further enhancements substantially increase FDI inflows. This supports the “efficiency-seeking” hypothesis and underscores the importance of optimizing the business environment, advancing industrial development, and upgrading technological infrastructure. (3) Given China’s pronounced regional disparities, tailored strategies are essential as follows: Eastern regions should focus on enhancing efficiency, Central regions on expanding financial openness, and Western regions on leveraging their efficiency advantages. These findings highlight the need for decentralized and flexible policy-making to promote equitable FDI distribution and sustainable growth. By addressing the research gap on regional heterogeneity and threshold effects, this study provides valuable insights for policymakers in China and other developing economies, offering a framework for designing targeted strategies to attract FDI and foster balanced economic development.

Canada can be viewed as a politically-created portfolio of ten provinces plus two territories, with weights in that portfolio also determined by political rather than economic considerations. Viewing Canada in this way allows one to use principles of modern portfolio theory from financial economics to examine the economic efficiency of the present portfolio of provinces. This paper considers the economic efficiency of the current political portfolio that is Canada in terms of its growth and risk characteristics vis-a-vis alternative political arrangements. Consideration is also given to alternative ways that Canada could be constituted - without Quebec, without the far West, and so on. It is shown that the accidental weights in the Canadian portfolio of provinces/territories provide an economic outcome that is close to the efficient frontier which designates economically efficient combinations of returns and risks, where 'return' relates to economic growth, and 'risk' to the volatility of economic growth. In an efficient portfolio, risk (volatility) is minimized for a given level of return (growth in our context), or alternatively growth is maximized for a given level of risk. In this portfolio context, it is shown that Quebec reduces risk but also 'returns' in the Canadian 'portfolio,' while the West reduces risk while also increasing economic returns. The paper represents the first formal empirical attempt to apply principles of portfolio theory developed in the field of finance to explore the political organization of a federalist state.

The pandemic crisis has highlighted the need to rethink the priorities of economic decision-making and fundamentally change the emphasis towards the principles of sustainable development. To assess even commercially viable investment projects, it is necessary to take into account their impact on long-term economic growth and social development. Appropriate methods for evaluating socially significant investment projects, along with financial estimates, require an assessment of the economic efficiency of investment projects, which are in line with the priorities of sustainable development. The paper proposes an integrated approach to the evaluation of socially significant investment projects using the case of the tourism industry, combining the private interests of the business with the public interests of expanding investment in projects with significant social effects. To do this, when comparing cash flows of financial and economic efficiency, flows associated with specific public effects, primarily social and tax ones, are identified. The proposed methods were tested for a real water park project in Russia. As a result of the calculations, a significant gap was revealed between relatively low financial efficiency along with high economic efficiency. The project was evaluated under various scenarios, including those with and without a pandemic. All calculation variants, taking into account the pandemic, show negative financial net present values for the project. However, even under the most pessimistic scenarios simulating the pandemic crisis, the level of economic efficiency remained positive, indicating greater opportunities for investment agents to adapt to adverse negative changes and the importance of social priorities in the context of sustainable development.

The chapter continues the study of the Markowitz model. The reader will learn how to compute an efficient portfolio with the given risk tolerance. The highlight is an explicit formula for efficient portfolios, rigorously derived and comprehensively discussed. The chapter analyses the minimum variance portfolio and the return-generating self-financing portfolio involved in the solution to the Markowitz optimization problem. It concludes with explaining the linear structure of the set of efficient portfolios.

Exploring the mean-variance portfolio optimization approach for planning wind repowering actions in Spain

When solving large-scale cardinality-constrained Markowitz mean–variance portfolio investment problems, exact solvers may be unable to derive some efficient portfolios, even within a reasonable time limit. In such cases, information on the distance from the best feasible solution, found before the optimization process has stopped, to the true efficient solution is unavailable. In this article, I demonstrate how to provide such information to the decision maker. I aim to use the concept of lower bounds and upper bounds on objective function values of an efficient portfolio, developed in my earlier works. I illustrate the proposed approach on a large-scale data set based upon real data. I address cases where a top-class commercial mixed-integer quadratic programming solver fails to provide efficient portfolios attempted to be derived by Chebyshev scalarization of the bi-objective optimization problem within a given time limit. In this case, I propose to transform purely technical information provided by the solver into information which can be used in navigation over the efficient frontier of the cardinality-constrained Markowitz mean–variance portfolio investment problem.

The publications on financial and economic analysis and efficiency evaluation of investment projects and programs were reviewed, and the current state of research was analyzed. Consideration was given to the general methodology and the problem-oriented models and methods of financial and economic analysis (Part I) and also to the models and methods to screen and rank the projects and to analyze the investment programs, as well as to the tools for their realization (Part II). Some directions of future research were discussed.

In some optimization problems, the expression of the objective function is more complex or difficult to express with an obvious analytical formula, so it is difficult or impossible to obtain its derivative, and only some calculations are required for the value of the objective function. The derivative method of the objective function is not involved. The purpose of this work is to study a direct search algorithm for big data based on linear programming. Analysis of market friction factors will be studied separately. In the empirical analysis of this work, the simulation analysis method is used to calculate the actual efficiency of the investment portfolio from the eligibility reduction model, and then the DEA model is used to carry out a modular evaluation of the effectiveness of the investment portfolio, and the correlation calculates the sum of the two return values. Taking into account the conscience constraints, the DEA model is used to evaluate the rationality and efficiency of portfolio efficiency. After sorting the portfolio DEA efficiency and real return ranking, the average correlation coefficient at K = 3 is 0.998, which is quite high.