Cash Flow Method Research Articles

The Investment Choice of Soft Drinks Industry by Valuation of Companies

Recently, more and more investors enter the market with increasing investment demand, but due to the diversity of the market and investors are not familiar with the market, so many failed investments. This paper will focus on the soft drink industry and evaluate three companies in the soft drink industry: Coca-Cola, Pepsi and Monster Beverage to select the most suitable companies for investors. All three companies are showing solid growth and this trend is expected to continue. This article focuses on the stock, profitability and capital structure of three companies, Coca-Cola, PepsiCo and Monster Beverage. First, from the stock side, through the comparison of Earnings per share and Price Per Earnings over five years, Coca-Cola has the most EPS growth, which means it is the most promising company, and Coca-Cola has the lowest PE value, the lower PE value means it has a higher stock price. So in terms of these two figures, Coca-Cola is the most suitable investment. Secondly, in terms of profitability, this paper starts with six financial data: revenue, net income, gross profit margin, EBIT margin, net profit margin and ROE. Although PepsiCo has high total revenue, net income is similar to Coca-Cola Company. On the contrary, Monster Beverage Company has a high net income to revenue ratio, although it is only medium-sized. Finally, from the capital structure perspective, this paper uses the discounted cash flow method to estimate the value of the three companies. Coca-Cola's equity value is the highest among the three companies, so it is the most suitable for investment. Therefore, it is concluded that Coca-Cola is the most suitable investment among the three companies at present.

Valuasi PT. Saliman Riyanto Group Menggunakan Metode Discounted Cash Flow Dan Strategi Penetapan Harga Saham Perdana (Initial Public Offering)

This study aims to determine the valuation of PT. Saliman Riyanto Group and determine the indication of the fair value of the share price to be released if the company makes an offer to potential investors either through an initial public offering (IPO) or closed offering using fundamental analysis, called the Discounted Cash Flow (DCF) method. As a private company, it is a difficulty for investors to know the value or valuation of PT. Saliman Riyanto Group and what is a reasonable price per share. This is a descriptive research with a quantitative approach. This study used techniques of data analysis, called the calculation of financial ratios, using the DCF formula. The results of research used the DCF method show the value (valuation) of PT. Saliman Riyanto Group is Rp. 494,257,978,926.22, - and the fair share price to be released in the IPO is Rp. 7,776,365.94

Feasibility Study of Road Improvement Geotextile using Discounted Cash Flow Method: Study Case of PT Berau Coal

Lati Mine Operation is one of the open pit mining operational owned by PT Berau Coal. This area has overburden removal production annual target 134,556,000 BCM and coal getting 8,631,000 MT in year 2022. In the first semester of 2022, actual overburden removal was achieved in 94% under the year to date plan. Based on pareto loss production analysis, the biggest lost contributor of overburden removal was came from hauler productivity parameter. The root cause of hauler productivity problem is material used for road surfacing which has implication to road condition. Road surfacing material was came from redisturb material that cause low bearing capacity on subgrade layer and impacted to road damage on the surface. One of improvement can be done to increase productivity and reduce cost maintenance is investment of geotextile implementation to mine road reinforcement. Therefore, project investment need to be evaluated through a comprehensive financial analysis to get financial feasibility of this project. This research will use capital budgeting analysis to evaluate the financial feasibility, including sensitivity analysis and risk analysis. The baseline of feasibility analysis regarding improvement project shows good result with Net Present Value (NPV) worth IDR 2.232.785.016, Internal Rate Return (IRR) of 42,56%, 1,46 of Profitability Index (PI) , and 1,2 years of payback period (PBP). Based on Monte Carlo Simulation, the probability of this project failing (NPV < 0) is 0%, or in the other words, there is no probability that the NPV project will generate negative value or loss in this project. In conclusion, mine road improvement using geotextile is feasible and potentially give optimum impact on increase productivity and cost efficiency regarding to mine road maintenance.

Research on the pricing of PPP project ABS products based on the right of income of heating

Introduction: The Public-Private Partnership (PPP) model has the advantages of enhancing the efficiency of social infrastructure construction and reducing the risk of government liabilities, and has been widely used and developed in China. In the current securitization of PPP project assets, the question of how to price them is key to whether the Asset-backed Securities (ABS) products can be issued successfully.Methods: This study analyzes the pricing process and influencing factors of PPP project ABS in the context of PPP projects in China by collating the relevant literature on PPP project ABS products and collating the advantages and disadvantages of the static discounted cash flow (SCF), static spread (SS), and option-adjusted spread (OAS) methods. The study finds that the SCF and SS methods, primarily used in pricing PPP project ABS products, lack consideration of interest rate changes, early repayment rates, and multiple interest rate path options, leading to biased results. This study introduces the Monte Carlo simulation pricing method (MCSM) and conducts an empirical analysis based on the case of the Heating income right ABS of Huaxia Happiness PPP Project ABS.Results: It is concluded that the Monte Carlo simulation method can more flexibly and accurately price PPP project ABS products with revenue rights as the underlying assets.Discussion: This study has reference significance for the pricing of ABS products in future PPP projects and the construction of PPP projects in integrated energy service industrial parks, and can promote the development of new integrated energy service industrial parks, thereby helping to improve the energy consumption structure of enterprises in industrial parks, improve energy use efficiency, ensure the safety of energy use by enterprises, and further enhance the application of new energy by enterprises, thereby reducing their Greenhouse gas emissions.

Feasibility of 10 MW Biomass-Fired Power Plant Used Rice Straw in Cambodia

This study investigates the feasibility of rice straw for energy production in Cambodia. The potential areas for a 10 MW biomass-fired power plant installation are estimated based on rice straw availability displayed in a graphic information system (GIS). The discounted cash flow (DCF) method on the profitability index (PI) was executed by Mathlab software, which was used to determine the period of the power plant profitability. The reduction of CO and CO2 emissions from the proposed rice straw biomass-fired power plant with 10 MW capacity was calculated and compared with the coal-fired power plant and open field burning. Prey Veng, Takeo, and Battambang are potential provinces that have an estimated rice straw source of 804,796 t/annum, 720,040 t/annum, and 603,273 t/annum, respectively. Within a 20-year project, the biomass-fired power plant can reach profitability between six and ten years with the operation of the rice-straw price of 20 USD/t to 40 USD/t. The total energy produced by these potential areas is 1251 GWh/annum, with a CO2 emission avoidance of 1.06 million t/annum compared to the coal-fired power plant operation. Simultaneously, the emission savings of the biomass-fired power plant compared to open-field burning are 0.61 million t/annum of CO2 and 0.02 million t/annum of CO in the study site. The findings are prospectively essential for further designing of a small-scale biomass-fired power plant in Cambodia.

Análise de viabilidade econômica para a primarização de serviços de manutenção hidráulica pelo método de Monte Carlo

Abstract Maintenance plays an indispensable role in the productive sector of an organization. The increasing use of high-precision operations in the steel industry means that hydraulic systems demand greater attention. This study proposes an evaluation framework for analyzing the economic feasibility of insourcing hydraulic maintenance services, seeking to present tools for assisting managers in decision-making and optimizing maintenance strategies. This paper presents a cash flow study, where the Net Present Value (NPV), the Internal Rate of Return (IRR), and the Profitability Index (PI) are calculated. Subsequently, the Monte Carlo method is applied to perform a sensitivity analysis for viewing the probabilities and output results. The main contribution of this study is to enable the evaluation of the results considering the economic feasibility of insourcing or outsourcing maintenance contracts through the proposed framework. In this case, the economic viability of insourcing presents a cost reduction in maintenance services. This approach suggested an industrial case study, where the use of the Monte Carlo and cash flow methods are useful tools for decision-making, contributing to the optimization of resources among industrial managers.

The evaluation of marketing competitiveness of B2B E-commerce enterprises based on optimized deep learning networks

In the context of e-commerce trade between enterprises, there are problems such as price wars, false advertising, and unreasonable operations aimed at seizing market share. However, traditional estimation methods cannot provide a reasonable evaluation of the marketing competitiveness of e-commerce enterprises from an overall perspective. To help enterprises better clarify their own position and quantify their marketing competitiveness, a competitiveness evaluation model based on optimized deep learning networks is proposed. By combining subjective and objective evaluation methods, the indicators that affect the marketing competitiveness of enterprises are assigned to obtain the final competitiveness value. The research outcomes expressed that the max absolute error of the model constructed by the research institute was 0.0006, the max relative error was 0.0045, and the model accuracy was 99.85%. In the secondary indicator experiment of marketing competition, the model determined that the turnover rate of fixed assets had the greatest impact, with a weight value of 0.1263. Nine companies were randomly selected for market value estimation, and the average relative error of the model was 14.90%, which was lower than the mean relative error of the relative valuation, cash flow and absolute valuation methods, with numerical differences of 8.03%, 2.94%, and 0.12%, respectively. The research findings illustrated that the model constructed by the research institute had good performance and certain reference values for evaluating the marketing competitiveness of e-commerce enterprises.

On the premature sale of assets

Valuing non-financial assets, appraisers usually do not take into account that sometimes their owners need to sell them anticipatory (before the end of their service life). In addition, the sale of an asset provides for a certain marketing period (time to wait for a suitable buyer). We propose a model for assessment the market value of an asset, taking into account these circumstances, based on the Discounted Cash Flow method. The benefits (cash flows) generated by the asset when it is used for its intended purpose in the coming period are assumed to be known. However, in this model, we additionally accept that the premature sale is due to the detection of (real or perceived) threats of a local nature, i.e. related only to a specific asset and its owner. At the same time, we consider the moment of local threat detection and the duration of marketing period of the asset as random variables. The formulas obtained also allow to take into account the impact of inflation, removable failures of the asset and its depreciation during the marketing period.

Інноваційні технології цифрової економіки як напрямок інвестування у розвиток України

The article examines the issue of innovative financial technologies in the context of the digital economy. The leading foreign experience of investing in fintech companies was analyzed, and the dynamic development of financial technologies was proven based on the analysis of statistical data. The main features of fintech companies are revealed. Quantitative and qualitative methods (the method of discounted cash flows, the first Chicago method and the Berkus method) of company value estimation, which are better than others, are able to take into account the peculiarities of the fintech industry, are considered. It has been proven that the optimal valuation method for mature fintech companies is the discounted cash flow method and the first Chicago method. A qualitative assessment of the Ukrainian fintech startup was also carried out using the Berkus method.

Economic assessment for vegetable waste valorization through the biogas-biomethane chain in Italy with a circular economy approach

The current geo-political framework and the environmental concern about pollution and global warming are leading Europe to rethink its energy production, moving forward to the incentivization the renewable energy market. In this scenario, the use of waste from the agri-food sector shows a huge potentiality to enhance the transition in line with the circular economy principles. Biogas production represents an environmental friendly strategy to successfully recover large amounts of waste and by-products to produce renewable energy. Furthermore, in light of the rising need of green biofuels, biogas can be converted into biomethane, allowing the implementation of a full circular model. The objective of this paper is to perform an economic assessment to evaluate whether the upgrading of an existing biogas plant, in which the diet includes also vegetable waste from a plant producing frozen vegetables, could be profitable considering different scenarios, to reach a sustainable circular model. The analysis will be conducted through the Discounted Cash Flow method, considering four main indexes: NPV, DPBT, IRR, and PI. The results highlight the unprofitability of the biogas-biomethane chain if the upgrading system is performed maintaining the same characteristics of the starting plant. On the other hand, if changes in the digester's diet occur, the investment becomes immediately profitable in the considered time-span. The circular economy model is not completely accomplished, as profitability can only be reached if silage maize is partially kept as feedstock. Moreover, the conversion of the plant is not economically feasible if an adequate subsidy is not provided. The economic assessment of the upgrading system for biogas to biomethane is an essential element to be provided to the agribusiness entrepreneurs, as they need all the relevant economic aspects to decide to invest and adopt this solution to establish an innovative circular business model in agriculture.

Economic efficiency of gas industry investment projects in Russia on the example of export gas pipelines

The efficiency of domestic and export supplies of natural gas largely determines the sustainable development of the Russian economy and national security. At present, in the context of sanction restrictions and increasing uncertainty in the global energy market, the theoretical and practical aspects of the economic efficiency of investment projects in the gas industry are of fundamental importance and require further development. The article discusses the theoretical foundations of the category “economic efficiency” and methodological approaches to its assessment on the example of investment projects in the gas industry. A comparative analysis of the standard methodology for determining economic efficiency of capital investments and the methodological recommendations for evaluating the effectiveness of investment projects in the planned and market economics has been performed based on the criteria specified by the authors. A review of published studies on methods for assessing economic efficiency of investment projects in the oil and gas sector has been performed. It is concluded that to assess the efficiency of investments is proposed to use the discounted cash flow method as the main approach, as well as the alternative methods in the papers of Russian authors. Two large-scale projects of the Russian gas industry have been considered, a review of published studies on the efficiency assessment has been performed with emphasis on the external effects due to implementation of the projects under consideration. According to the study results, the uniqueness of the implementation conditions of each gas transportation project, fundamental importance of the influence of non-economic factors on the project implementation and the need to develop assessment methods for the economic efficiency of investment projects were noted with due regard to the uncertainty and risk impact.

Study on stability and economic evaluation of two-well-vertical salt cavern energy storage

In order to take advantage of the special layered salt rock in China, the idea of using two-well-vertical (TWV) to construct cavern was put forward, and it has been applied in some salt mines. However, at present, there is still a lack of in-depth research on the two factors that greatly affect the stability of the TWV cavern: the roof shape and working conditions. In addition, there is still a lack of targeted research on the economic rationality of constructing caverns by TWV. Therefore, in this study, based on the cavern shape of the TWV method, salt cavern underground gas storage (UGS) model with buried depth of 1130 m was established, and numerical simulation research was conducted under different roof shapes and injection-production (IP) frequency. The simulation results show that the roof bulge will produce large deformation and is a potential unstable area. When the IP frequency increases, the risk of instability will increase to some extent. In addition, the design under different working conditions is optimized and the IP frequency and the minimum operation internal pressure (Pmin) suitable for different well spacing are put forward. Then, based on the discounted cash flow (DCF) method, the economic analysis of the proposed TWV salt cavern construction project was carried out. The internal rate of return (IRR), financial net present value, investment payback period and storage and transfer fee are evaluated, and the break-even point of the project was analyzed. Comprehensive research shows that it is feasible to use the TWV method to construct salt cavern in China.

A Mixed Review of Cash Flow Modeling: Potential of Blockchain for Modular Construction

Cash is considered the most critical resource in construction projects. However, many contractors fail to obtain adequate liquidity due to a lack of proper cash flow management. Therefore, numerous research studies have been conducted to address cash flow-related issues in the construction industry. However, the literature still lacks a comprehensive review of cash flow management, methods and topics, in the construction industry. This study contributes by providing a holistic, up-to-date, and thorough review of 172 journal articles on construction cash flow. To achieve this primary objective, the study applies a mixed review methodology using scientometric and systematic reviews. The scientometric analysis provides the most contributing scholars, the timeline of cash flow research attention, and keywords clustering. On the other hand, the systematic analysis categorizes the cash flow themes, identifies current literature gaps, and highlights future research areas in the cash flow domain. The results show that cash flow analysis gained more research attention in the last two decades, cash flow-based schedule is the most frequent topic in the literature, and optimization techniques are predominant in the literature. Consequently, the study highlights five potential research frontiers. Further, an automated payment framework for modular construction projects using Blockchain-based smart contracts is developed to address some of the literature limitations. This study provides a guideline for future research efforts and raises researchers’ awareness of the latest trends and methods of construction cash flow analysis.

An Assessment of Currency Exposure of Non-Financial Firms in ASEAN-4: Insights using the Stock Returns and Cash Flow Methodologies

This study examines the extent and nature of foreign exchange exposure in 405 listed corporations operating in the ASEAN-4 nations, Indonesia, Malaysia, Singapore, and Thailand. The study period of 23 years, from 1995 to 2017, covers the two major crisis periods, the Asian financial crisis (AFC) of 1997 and the global financial crisis (GFC) of 2008. Our study improves on earlier work by using two alternative assessment methods, i.e., stock returns (SR) and cash flow (CF) methods. We report several interesting and noteworthy results. First, we find that the stock returns approach results in a higher incidence of exchange rate exposure relative to the cash flow method. Specifically, about 65% and 28% of the total ASEAN-4 firms had significant exposure to all currencies under the stock returns and cash flow methods, respectively. Second, we find the sample firms to have predominant exposure to the US dollar, signifying the important role played by the United States (US) as the major trading partner of the ASEAN-4. Third, when evaluating time-varying exposure, we find that the incidence of the exchange rate exposure is event-specific. Most of our sample firms were highly exposed to exchange rates during the mid-points of the AFC and the GFC.

Influence of financial subsidies on innovation efficiency of start-up enterprises

The start-up period is the most difficult period for enterprises to survive and innovate. How will government subsidies affect the innovation efficiency of enterprises in the start-up period? And, is there any heterogeneity? The academic research is still relatively preliminary and controversial. This study adopts the cash flow method to screen a sample of start-ups from Chinese GEM, STAR Market and SME board-listed companies from 2010 to 2020 for empirical research. The study found that financial subsidies can generally promote the innovation efficiency of start-ups, but there is also significant heterogeneity by industry, region and whether the subsidies are sustainable. Financial subsidies generally have a signaling effect that facilitates startups to attract external capital, and this effect is most significant in the industrial sector. Overall, fiscal decentralization negatively regulates the effect of subsidies on the innovation efficiency of start-ups, especially in the public utilities and industrial sectors. The government subsidies are relatively insignificant to improve the innovation efficiency of start-up enterprises in non-first-tier cities, especially in small and medium-sized cities, and the multiplier effect is relatively small. The effect of non-sustainable subsidies is not significant because they cannot produce a long-term mechanism and thus are difficult to influence future expectations and decisions. The subsidy effect is not significant in other industries outside the industrial sector, and the lower the level of industry competition, the weaker the signaling effect of enterprise credit, the less conducive to its access to external innovation resources to enhance innovation efficiency through the signaling effect of government subsidies. Moreover, financial decentralization does not improve the innovation efficiency of government subsidies as expected, but weakens the innovation efficiency of fiscal subsidies for start-up enterprises in general. The study proposed that the government (especially the small and medium-sized city government) should optimize the business environment and financial capital allocation, change the supervision and management mechanism, improve the efficiency of capital utilization and reduce the crowding out effect. The government’s subsidy policy should be further standardized and refined.

THE EFFICIENCY OF INDIVIDUAL AND PUBLIC SPENDING ON HIGHER EDUCATION IN OECD COUNTRIES AND IN UKRAINE

The article is devoted to the analysis of the efficiency of higher education funding from the perspective of higher education applicants (cost of education) and from the perspective of the state (budget expenditures, investments in preparation of specialists).The article contains the main indicators of socioeconomic development of the OECD countries and Ukraine. The analysis has shown that in Ukraine the amount of higher education expenditures as a percentage of GDP has an average value compared to the OECD countries, while this amount in monetary terms is significantly lower than in other countries.The efficiency of higher education costs for the individual and expenditures for the state in the OECD countries and in Ukraine have been evaluated. The efficiency of individual costs of higher education is calculated using the discounted cash flow method, applied to the cost of education and the difference in wages between qualified and unqualified personnel. The efficiency of public spending on higher education (investment in the training of specialists) is calculated using the discounted cash flow method applied to the share of public spending on higher education and GDP growth generated by labor with better skills. The results of the calculations have shown that the efficiency of state expenditures on higher education is higher than the efficiency of individual costs.

Экономическая оценка проектов разработки месторождений углеводородного сырья в условиях северных районов добычи с применением бинарного и реверсированного дисконтирования.

The conversion from the development of large deposits to unconventional, small and Arctic deposits of hydrocarbon raw materials in the Russian requires oil and gas companies improving the quality of the economic justification of projects, including cost-effectively recoverable reserves. For this reason, the development of the discounted cash flow (DCF) method for economic evaluation of oil and gas projects is required. The purpose of the study was to develop a methodological approach to the economic evaluation of oil and gas projects. The disadvantages of the DCF model in the economic evaluation of oil and gas field development projects are analyzed, a comparative analysis of project evaluation methods through the use of binary and reverting discounting models is performed. The authors justified the choice of a risk-free discount rate for project outflows and dynamically changing values of discount rates for project cash inflows for the evaluation of oil and gas projects, taking into account their identified features. The application of the developed methodological approach, both at the pre-project phase and during the operation of the field, will allow oil and gas companies to justify the magnitude of commercially exploitable reserves and indicators of the economic efficiency of the project due to more correct risk accounting. The developed methodological approach has been approved on the example of the Novoportovskoye field development project.

Financial Performance and Stock Valuation of Tobacco Company in Indonesia Stock Exchange (IDX) Amidst the Hike of Excise Tax Rate Period 2017-2021

In the tobacco sector, there was a consistent decline in the price of shares outstanding during 2017 – 2021. The consistent decline in stock prices in the market in the tobacco sector initiated the author to analyze the financial performance condition of all companies in the tobacco sector and the stock valuation of companies with the best financial performance compared to other companies. So, it can be concluded that the market price position is now undervalued or still in an overvalued position to be the basis for making investment decisions. In this study, the financial performance of tobacco companies will be analyzed using the method of the decree of the Ministry of State-Owned Enterprises (SOEs) or decree No. KEP-100 / MBU / 2002. This method will result in the health level status (Healthy, Less Healthy, Unhealthy) of each tobacco company each year in the period 2017 to 2021. Stock valuation in companies with the healthiest company predicate from the tobacco sector on the Indonesian stock exchange for the 2017-2021 period. The Stock Valuation that will be used is the absolute and relative method. In the absolute method, the researcher used the discounted cash flow (DCF) method and Dividend Discount Model (DDM). As for the relative method, the researcher used Price to Book Value (PBV), Price to Earnings Ratio (PER), and EV/EBITDA. Based on PBV, PER, and EV/EBITDA, the intrinsic value of HMSP is Rp. 660.56, Rp. 1,093.53, and Rp. 1,104.57, respectively. DCF generates a result of IDR 1,301.35, and DDM gets IDR 1,375.53. Since only the PBV results reveal overvalued outcomes when compared to the market price, even though the share price is still Rp 915, it can be said that the market price of HMSP’s shares is undervalued. As a result, the researcher suggests investing in HMSP shares. The suggestion is being made because there is a chance for investors to profit from capital gains and dividends because the market price of HMSP is still undervalued in comparison to its underlying worth.

Economic performance of an SOFC combined system with green hydrogen methanation of stored CO2

As the deployment of renewable energies increases, the development of power sources needed to adjust the supply–demand balance plays an important role. This study investigates a solid oxide fuel cell combined cycle (SOFC-CC) system with carbon dioxide capture, utilization, and storage (CCUS) that adopts green hydrogen methanation of stored CO2. The proposed system has high power generation efficiency and does not contribute to global warming because the CO2 emitted during operation is captured after separation, stored in carbon capture and storage, and converted into a synthetic fuel by methanation. However, because the economic feasibility of SOFC-CC with CCUS is unknown, the discounted cash flow method, which is used in the Projected Cost of Generating Electricity report, is used in this study. For a scenario with a 750 MW rated output, 25 MW photovoltaic capacity, and 3% discount rate at a unit electricity sales price of 0.36 USD/kWh, the simple integration balance, net present value, and dynamic payback periods are 9, 10, and 12 years, respectively. Therefore, the proposed system is economically viable.

Capital Budgeting Technique Used in Nepalese Manufacturing Small and Medium Sized Enterprises

This paper examines the extent of usage of capital budgeting techniques in small and medium sized enterprises (SMEs) and factors influencing on the choice of capital budgeting techniques adopted by SMEs. A self-administered structured questionnaire survey was conducted with 48 small and medium sized manufacturing enterprises operated in Banke district and information has been gathered through questionnaires and personal interviews. The respondents were chief financial officer and concerned authorities of the firm responsible for long term investment decision. Results of the study reveal that payback period is the dominant capital budgeting technique used in SMEs. The results found that net present value was also the most prevalent capital budgeting method. Net present value as the capital budgeting technique is higher in SMEs who operate in the industry for more than 10 years. Easy to explain to top management, obsolescence due to technological developments and simplicity leading to less time and cost involved revealed the main reasons for using the payback period method. Some of the firms are using discounted cash flow methods of capital budgeting and preferring net present value over internal rate of return.