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Model of Assessing the Impact of Factors on Cash Flow Multiplicators

Author

Listed:
  • N.N. Natocheeva
  • V.B. Frolova
  • T.V. Belyanchikova

Abstract

The article suggests one of the options for solving the problem of accounting for the impact of factors on the change in cash flow when investing or estimating the business valuation, including for the purposes of future M&A transactions. The authors economically justified the multiplier of backing the stocks by the amount of sale proceeds used as an indicator that most efficiently describes the financial state of the issuer. The article proposes a model of assessing the impact of factors that allows an investor to define the degree of impact of cash flow multipliers on the change in the multiplier of the stock market price to revenue. Depending on the growth or fall in the value of multiplier of the stock market price to revenue, the investor can forecast future free cash flow or financial losses, which will allow them to make an economically justified decision to invest in stocks of a particular issuer. The article presents a case of using the developed model of the factors impact.

Suggested Citation

  • N.N. Natocheeva & V.B. Frolova & T.V. Belyanchikova, 2018. "Model of Assessing the Impact of Factors on Cash Flow Multiplicators," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 338-347.
    • Handle: RePEc:ers:journl:v:xxi:y:2018:i:special2:p:338-347
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    References listed on IDEAS

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    More about this item

    Keywords

    Factor model; multiplier; capitalization; cash flow; business valuation; business profits; revenue; profitability; dividend; owner’s wealth; investment.;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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