Cash Flow Method Research Articles

Process Approach and Construction of the Database for Non-Core Asset Management in Credit Organizations

A method for building end-to-end management accounting in a division of the Bank’s subdevision specializing in working with non-core assets is proposed. Has been proposed the process approach, an algorithm for building a database for the formation of key performance and control indicators. Has been described the key stages of the department's work, the attribute composition of entities (set) arriving, enriched and transmitted at each stage of the department's work. By modeling the process has been built a role model, access and editing rights for employees. Data sources (reference books) for optimization and unification of the process of filling the database (tuple) are proposed. A method of accessing the database in the Power Query Microsoft Excel add-in is proposed, which allows you to collect data from files of all basic data types, process and refine the received data. In the interactive programming environment Jupyter Notebook, mathematical and financial models for data analysis (logistic regression, decision tree and discounted cash flow method) were built based on data in order to predict costs, the timing of asset exposure and make a decision on the optimal cost of putting property on the Bank's balance sheet and selling price. Based on ready-made libraries (matpotlib, seaborn, plotly), options for data visualization for management are proposed. Using the example of the Bank's division, the author describes the positive effects and opportunities that open up to the management of different levels in solving day-to-day tasks and planning the activities of the division. A technical task was proposed for the development of a showcase for the sale of non-core assets on the Bank's website as an environment for the accumulation of external data for making flexible management decisions.

Optimization of Tourism Real Estate Development Project Based on Option Premium Model

Compared with that of traditional housing real estate, the development of tourism real estate is time-consuming, complex, and irreversible. It is hard to guide investment decision-making on tourism real estate with the conventional discount cash flow (DCF) method. This paper aims to demonstrate that the real option method can improve and optimize the investment decision-making on tourism real estate. Through case analysis, the real option model, i.e., the classic American real option model, and binary tree value distribution model were adopted to analyze the factors affecting the real option of tourism real estate, optimize the development sequence of tourism real estate project, and demonstrate the phased development value of tourism real state, thereby enhancing the development value of tourism real estate projects. The case analysis proves that tourism real estate investment is fully consistent with real option in the uncertain spatiotemporal attributes: uncertainty, irreversibility, and timeliness. Therefore, tourism real estate project carries obvious features of real option. The decision-making by the real option model is much more scientific and superior than that by the conventional DCF method. Since the application of real option theory has been emphasizing housing real estate over tourism real estate, the research results enrich the theory on real option-based investment decision-making for real estate and expand the application scope of real option.

Promoting Sustainability: Wastewater Treatment Plants as a Source of Biomethane in Regions Far from a High-Pressure Grid. A Real Portuguese Case Study

Wastewater treatment plants (WWTP) located in regions far from a high-pressure grid can produce renewable biomethane, which can partially substitute the natural gas locally consumed. However, the economic viability of implementing biomethane plants in WWTP has to be guaranteed. This paper uses the discount cash flow method to analyze the economic viability of producing biomethane in a WWTP located in Évora (Portugal). The results show that, under the current conditions, it is unprofitable to produce biomethane in this WWTP. Since selling the CO2 separated from biogas may result in an additional income, this option was also considered. In this case, a price of 46 EUR/t CO2 has to be paid to make the project viable. Finally, the impact of potential government incentives in the form of feed-in premia was investigated. Without selling CO2, the project would only be profitable for feed-in premia above 55.5 EUR/MWh. If all the CO2 produced was sold at 30 EUR/t CO2, a premium price of 20 EUR/MWh would make the project profitable. This study shows that the economic attractiveness of producing biomethane in small WWTP is only secured through sufficient financial incentives, which are vital for developing the biomethane market with all its associated advantages.

Stock Valuation using Discounted Cash Flow Method with Free Cash Flow to Equity and Relative Valuation Approaches on State-Owned Banks Listed on IDX for 2021 to 2025 Period Projection

This study aims to project the intrinsic value of state-owned banks listed on IDX for the 2021 to 2025 projection. This study uses the Discounted Cash Flow (DCF) method with the Free Cash Flow to Equity (FCFE) approach specifically for banks by looking at the regulatory capital. Meanwhile, it is also used the Relative Valuation method with the Price to Book Value (PBV) and Price Earnings Ratio (PER) approaches. This study uses three scenarios will be used, which consist of a pessimistic scenario (the average condition of the industry), a moderate scenario (the same condition as the company's growth), and an optimistic scenario (a condition above industry growth), which aims to project the stock value over the next five years. The data used in this study comes from historical data during the 2016 to 2020 period. Based on the results, the stock prices of state-owned banks using the FCFE method shows undervalued results for all scenarios. Meanwhile, using the relative valuation method, PBV in the optimistic scenario only shows BBNI undervalued conditions. In addition, in moderate and pessimistic scenarios, only BBRI shows overvalued conditions. Furthermore, PER shows undervalued results for all scenarios.

Stock Valuation in Pharmaceutical Sub-Sector Companies using the Discounted Cash Flow and Relative Valuation Methods in the 2013-2020 Period

This research aims at calculating the fair value of shares of pharmaceutical companies listed on the Indonesia Stock Exchange (IDX). The data used in this research is historical data from the 2013-2020 financial statements, which are used as the basis for projections in 2021-2025. The method used in this research is Discounted Cash Flow (DCF) method with Free Cash Flow to the Firm (FCFF) approach and Relative Valuation method with Price to Earning Ratio (PER) and Price to Book Value (PBV) approaches in three scenarios. The three scenarios used are the optimistic scenario (condition above industry growth), the moderate scenario (the most likely condition for the company), and the pessimistic scenario (the average condition of the industry). The results of the research showed that by using the DCF-FCFF method, KAEF and PYFA stocks experienced overvalued conditions in all scenarios. Meanwhile, KLBF and DVLA stocks were undervalued in all scenarios. Then, from the calculation of the Relative Valuation method, each company was still within the industry range in all scenarios. Overall, KAEF stocks were overvalued by 57.817%, KLBF stocks were undervalued by 7.879%, DVLA stocks were undervalued by 370.865%, and PYFA stocks were overvalued by 16.662% both in DCF method and in Relative Valuation method.

Stock Valuation Using Discounted Cash Flow and Relative Valuation Methods on Cosmetics and Household Goods Sub-Sector Listed on the Indonesia Stock Exchange for 2021-2025 Projections

This research aims to examine the intrinsic value of stocks in the cosmetics and household goods sub-sector listed on the Indonesia Stock Exchange. Data used were from 2016-2020 to calculate the historical performance of each company and projected from 2021-2025 based on three scenarios, pessimistic ; moderate ; and optimistic. The Discounted Cash Flow (DCF) method was used with the Free Cash Flow to Firm (FCFF) approach and the calculation of the Relative Valuation (RV) method with the Price to Book Value (PBV) and Price to Earning Ratio (PER) approaches . The results found that by using the DCF method, UNVR, KINO, and TCID were overvalued in all scenarios, while MBTO and MRAT were overvalued in the pessimistic and moderate scenarios and undervalued in the optimistic scenario. Meanwhile, by using the relative valuation method with the PER approach, in all scenarios, the intrinsic values of UNVR wasovervalued, while KINO, TCID, MBTO and MRAT were undervalued. For the PBV approach, the intrinsic values of UNVR was overvalued in all scenarios, while KINO, TCID, MBTO, and MRAT were undervalued in all scenarios. Overall, UNVR shares were overvalued by - 54,67 % , KINO shares were overvalued by -81 ,27 % , TCID shares were overvalued by -4 5,37 % , MBTO shares were overvalued by - 47,19 % , and MRAT shares were undervalued by 15,65 % .

Stock Valuation on IDX-Listed Retail Companies Using DCF with FCFF and Relative Valuation (2021-2025 Projection)

This study aims to examine the intrinsic value of three companies’ stocks in the trade, services, and investment sector with the greatest market capitalization listed on the Indonesia Stock Exchange (IDX) in 2021. Data from 2016 to 2020 was used to calculate each company's historical performance. Then the projection of 2021 to 2025 was made based on three scenarios: optimistic, moderate, and pessimistic. To determine the intrinsic value of these companies, this study employed Discounted Cash Flow (DCF) method with Free Cash Flow to Firm (FCFF) approach, as well as the Relative Valuation method with the Price to Book Value (PBV) and Price to Earnings Ratio (PER) approaches. It was found that based on the DCF and RV-PER and PBV analysis in all scenarios, ACES stock is considered to be overvalued. On the other hand, based on the DCF method in all scenarios, MAPI stock is considered to be undervalued, while the RV-PER and PBV show that the stock is overvalued in all scenarios. Based on the DCF method in all scenarios, AMRT stock is considered to be undervalued, while the RV-PER and PBV show that the stock is overvalued in all scenarios. In conclusion, ACES is overvalued by 1.6%, MAPI is undervalued by 1.203%, and AMRT is undervalued by 1.136%.

Stock Valuation Using Discounted Cash Flow Method with Free Cash Flow to Firm and Relative Valuation on Food and Beverage Sub-Sector Companies Listed on the Indonesia Stock Exchange for 2021-2025 Projections

This research aims at examining the intrinsic value of stocks in the food and beverage sector in 2021. This research used the 2016-2020 data to calculate the historical performance of each company and is projected to estimate the company's financial behavior in the last five years from 2021-2025, with three scenarios, namely optimistic, moderate, and pessimistic. The methods used to assess the intrinsic value of these shares were the discounted cash flow (DCF) and the relative valuation (RV). The results found that by using the DCF method in all scenarios, namely pessimistic, moderate and optimistic, INDF and ICBP were in the undervalued conditions, and MYOR was in the overvalued condition. Meanwhile, by using the relative valuation method with the PER approach, in all scenarios, the intrinsic values of INDF, ICBP, and MYOR were in overvalued conditions. For the PBV approach, the intrinsic values of INDF and ICBP were undervalued in all scenarios, while MYOR was undervalued in the pessimistic and moderate scenarios and overvalued in the optimistic scenarios. Overall, INDF shares were undervalued by 52,3%, ICBP shares were undervalued by 26,3% and MYOR shares were overvalued by -52%.

Valuation of Machines with a Random Service Life Based on the System of National Accounts – 2008

We propose a mathematical model describing the decrease in the market value of machines (depreciation) with age in a situation where its service life is random and has a Weibull distribution. We measure the depreciation of a used machinery item using a goodness factor, that is, the ratio of its value to the value of a similar new machinery item. The model is based on the principle of anticipation of benefits adopted in the valuation theory and the discounting cash flows method. The model takes into account that machine’s technical and economic characteristics deteriorate with age and its benefits are reduced according to the hyperbolic dependence adopted in the system of national accounts SNA‑2008. We have built the dependences of average machine's goodness factor on its relative age (the ratio of the actual age to the average service life). Calculations show that the discount rate and average service life have little effect on these dependencies. This made it possible to divide the machines into three categories and propose for each of them its own dependence of the goodness factor on the relative age, which is convenient for practical use in appraisal activities.

Nilai Perusahaan pada Struktur Modal Optimal PT. Trans Marga Jateng dan PT. Jasamarga Surabaya Mojokerto Tahun 2020

In order to maintain the company's ability to fulfill its liabilities, PT. Jasa Marga (Persero) Tbk will takes a corporate action strategy to strengthen capital structure for the Toll Road Subsidiaries (/APJT). APJT selected are PT. Trans Marga Central Java (/PT. TMJ, is the operator of Semarang-Solo toll road) and PT. Jasamarga Surabaya Mojokerto (/PT. JSM, is the operator of Surabaya-Mojokerto toll road) because of its capability to fulfill their solvents. Corporate action strategy done by analyze related with company performance baluation, optimal capital structure analysis. For Company performance valuation, analyze is done with company's financial ratios. From the calculation and analysis of profitability ratios; liquidity ratios and solvency ratios, PT. TMJ and PT. JSM during year 2015-2019 showed fair good performance. The composition of the capital structure to obtain optimal value for PT. TMJ and PT. JSM are range from 60:40 to 30:70 for the composition of debt and equity. The results of the company valuation using Discounted Cash Flow (DCF) method show that the company value of PT. TMJ, with a capital structure composition of 60:40 worth IDR. 25,862,- /share and with a capital composition of 70:30 share value of PT. TMJ in the amount of IDR.10,418,- /share. As for PT. JSM with a capital structure composition of 60:40 is IDR. 2,709,- /share and with a capital composition of 70:30 the share value of PT. JSM is IDR. 911,- /share. From analyze result, Management should pay more attention in capital expense due it’s effect in Optimizing Capital Structure, then from that Optimal Capital structure, APJT can reduce debt portion dan increasing uts equity portion through several strategy

Agrribisnis Pergudangan Benih Bawang Merah (Studi Kasus di Kelompok Tani Sarimakmur)

The purpose of this research was to detect the value and revenue, the cost, the profit accounting rate of return, payback period, dan net present value, the SARIMAKMUR, Kreek, district of Bantul, in 2001. The data was collected by interviewing the management staff, and being analyzed by accounting and cash flow method, and tabel. The result indicated that the revenue Rp 84.000.000, the cost Rp 45.190.333,33, the profit us Rp 38.909.667,67, the NPV a Rp140.050.000,- and the project feable Keywords the value and revenue, rate of return, project feasible

Intergenerational Transgressions in the Context of Changes in the Value of Human Capital in an Organization

The article analyzes the influence of intergenerational transgressions on changes in the value of human capital in an organization. It uses the historical cost method as well as the discounted cash flow method, proposing a prior methodical approach with their application. Also considered is the impact of risk on the increase or decrease in value and adequate personal strategies are addressed.

Valuation of Wind Energy Turbines Using Volatility of Wind and Price

The limitedness of the nonrenewable local energy resources in Israel, even in the background of the later gas fields’ findings, continues to force the state to devote various efforts towards ‘green’ energy development. These efforts include installations, both for the solar and for wind energy, thus improving the diversity of energy sources. While the standard discounted cash flow (DCF) method using the net present value (NPV) criterion is extensively adopted to evaluate investments, the standard DCF method is inappropriate for the rapidly changing investment climate and for the managerial flexibility in investment decisions. In recent years, the real options analysis (ROA) technique has been widely applied in many studies for the valuation of renewable energy investment projects. Taking into account the above background, we apply, in this study, the real options analysis approach for the valuation of wind energy turbines and apply it to the analysis of wind energy economic potential in Israel, which is the context of our work. We hypothesize that due to nature of wind energy production uncertainties, the ROA method is better than the alternative. The novelty of this paper includes the following: real world wind statistics of the Merom Golan site in Israel (velocity 3.73 m/s, with a standard deviation of 2.03 m/s), a realistic power generation estimation (power generation of 1205.84 kW with a standard deviation of about 0.5% in annual value which is worth about 1.3 M$ per annum), and an economic model to evaluate the profitability of such a project. We thus discuss the existing challenges of diversifying renewable energy sources in Israel by adding wind installations. Our motivation is to introduce a method which will allow investors and officials to take into account uncertainties when deciding in investing in such wind installations. The outcomes of the paper, which are obtained using the method of Weibull statistics and the Black–Scholes ROA technique, include the result that market price volatility adds to the uncertainties much more than any wind fluctuations, provided that the analysis is integrated over a long enough time.

The Frozen Supply Chain Business Case: A Management Accounting Instructional Resource

ABSTRACTThis case guides students through the process of preparing a real-life business case. The business case involves capital expenditure analysis for a potential project in the Wally-Mart Supermarkets frozen supply chain. There are three parts to the business case: (1) prepare a financial model in Excel with a discounted cash flow method to analyze relevant incremental capital expenditures, revenues, costs, and profits; (2) concisely communicate the financial model and business case in a business style Word report; and (3) concisely communicate the financial model and business case in a business style PowerPoint presentation. The case materials include a practice financial modeling exercise. The case is suitable for use in undergraduate and graduate management accounting courses.

Optimizing hydrothermal carbonization of olive tree pruning: A techno-economic analysis based on experimental results

In this study the optimization of the hydrothermal carbonization process for the conversion of olive tree pruning into biofuel is presented. To this end, a combined experimental-economic assessment is performed. Experimental data obtained at laboratory scale were used to estimate the economic performance of a hypothetical industrial scale plant. To evaluate the viability of the project, three different plant sizes according to their capacity were selected (1250–625–312.5 kg/h). The discounted cash flow method was applied for the profitability analysis. Different scenarios were analyzed considering the reduction of associate costs or the improvement of the revenues compared to the baseline case. Results indicate that with the sizes studied, none of the alternatives are profitable. Despite that, the larger capacity shows the best outcomes. In this case, minimum selling price of 0.39 €/kg for hydrochar is required to reach profitability. Lower plant sizes would require higher selling prices (i.e., 0.46 €/kg for 625 kg/h capacity and 0.59 €/kg for 312.5 kg/h capacity). Similarly, a reduction of 33% in the electrical energy consumption can make the plan be profitable for the larger capacity. Likewise, a reduction until 0.053 €/kWh in the electricity price must be reached for achieving profitability. Thus, importance of government incentives is revealed in this work given that the reduction of costs along with the improvement in the revenues for the selling of the product can make the project economically viable. Other parameters like the number of workers are also interesting to consider as for example the reduction by two units improves the NPV value in almost 600 k€ for all the plant sizes.

The Role of the Start-Up Aid for Young Farmers in the Adoption of Innovative Agricultural Activities: The Case of Aloe Vera

The poor generational renewal has been identified as a key issue for the EU policy that undermines the restructuring of the agricultural sector and the revitalisation of rural areas. The start-up aid for young farmers is one of the main EU-driven policy measures that try to mitigate this trend, by facilitating the initial investment of young newcomers in agriculture. At the same time, innovative crops with appealing characteristics are proposed as promising alternatives with high socioeconomic and low environmental impacts. Recently, a draft new call of the start-up aid for young farmers measure has been set under public consultation in Greece, which significantly alters the requirements and the level of support of the beneficiaries, compared to the previous one. The aim of this study is to explore the consequences of this change to the desirability to invest in the organic aloe vera crop, one of the leading innovating crops in Greece. In this study, taking into consideration the embedded risk and uncertainty, we utilise a stochastic version of the Net Present Value (NPV) analysis, a common discount cash flows method to detect the desirability of an investment. Results indicate that the potential alteration of the start-up aid for young farmers deteriorates the desirability of this investment and thus prevents farmers from its adoption. The analysis provides useful insights by highlighting risk factors and the possible impacts of policy measures on the desirability of innovative crops; thus, it can be useful both for investors and policymakers.

Economic technology analysis of LTE advanced pro dual spectrum licensed and unlicensed access using discounted cash flow methods

<p>Since implementing the long term evolution (LTE) technology, the surge in data service traffic has increased, causing an increase in demand spectrum, which has resulted in gaps in capacity requirements. Wireless service providers can respond to LTE technology updates. With LTE advanced pro technology that utilizes unlicensed spectrum technology can provide solutions to increase capacity and throughput. In this study, LTE advanced pro planning by capacity method to find the number of eNodeB and using the discounted cash flow method to analyze the feasibility of the costs to be invested in the implementation of the LTE. The results of the four simulated scenarios concluded that the number of eNodeB from the IV scenario with 20 MHz bandwidth at 1800 MHz frequency and 20 MHz bandwidth at 5 GHz frequency amounted to 23 sites, with a positive NPV value of $ 271,936.96, IRR of 14.91%, and for payback period occurred in the 3rd year. Thus the fourth scenario is feasible to be implemented.</p>

Valuating consumer credit portfolios

This paper proposes a model in which the borrower credit risk is associated with the cash flow method to assess the economic value of a consumer credit portfolio. A Monte Carlo simulation applying the method in an illustrative loan reveals that the lending standards of the institution, captured in the model by the expected and unexpected losses of the contract according to the Basel II Internal Rating Based Approach, is a key driver for the intrinsic value of the portfolio, lending support to the evidence that a bank’s credit policy and bank valuation are associated

Economic comparison of food protein production with single-cell organisms from lignocellulose side-streams

In recent years, the cellular agriculture concept has been proposed as an option to replace livestock proteins. This study presents a conceptual level techno-economic analysis of four concepts where food is produced by microorganisms based on wheat straw. Three single-cell proteins and one recombinant protein process were conceptualized. The process included steam explosion pretreatment, enzymatic hydrolysis, fermentation, and downstream processing. The enzymatic hydrolysis was optimized to minimize the production costs. The minimum protein selling price was determined by net present value using the discounted cash-flow method, which was compared to respective animal and plant proteins. The minimum protein selling prices were 5160–9007 €/ton proposing the processes to be in the feasible range, but the processes still require further development. The sensitivity of the parameters was estimated by sensitivity analysis, which revealed the most critical components in the production to be capacity, investment, interest, and enzyme and raw material costs.

THE VALUATION OF THE COST OF CAPITAL THROUGH THE DCF MODEL

This article describes the scientific and theoretical aspects of using thediscounted cash flow method in assessing the capital value of a joint stock company.Also, the discounted cash flows method was used to assess the capital value of JSC"Kokand Mechanical Plant". It also identifies existing problems in using the methodof discounted cash flows in the assessment of the capital value of the joint-stockcompany and ways to overcome them.