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Financial Stability Control for Business Sustainability: A Case Study from Food Production

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  • Tomas Macak

    (Department of Management, Faculty of Economics and Management, Czech University of Life Sciences Prague, Kamycka 129, 16500 Prague, Czech Republic)

Abstract

Conventional financial management methods, based on extrapolation approaches to financial analysis, often reach their limits due to violations of stationary controlled financial variables, for example, interventions in the economy and social life necessary to manage the COVID-19 pandemic. Therefore, we have created a procedure for controlling financial quantities, which respects the non-stationarity of the controlled quantity using the maximum control deviation covering the confidence interval of a random variable or random vector. For this interval, we then determined the algebraic criteria of the transfer functions using the Laplace transform. For the Laplace transform, we determined the theorem on the values of the stable roots of the characteristic equation, including the deductive proof. This theorem is directly usable for determining the stability of the management for selected financial variables. For the practical application, we used the consistency of the stable roots of the characteristic equation with the Stodola and Hurwitz stability conditions. We demonstrated the procedure for selected quantities of financial management in food production. In conclusion, we proposed a control mechanism for the convergence of regulatory deviation using a combination of proportional and integration schemes. We also determined the diversification of action interventions (into development, production, and marketing) using a factorial design.

Suggested Citation

  • Tomas Macak, 2022. "Financial Stability Control for Business Sustainability: A Case Study from Food Production," Mathematics, MDPI, vol. 10(3), pages 1-16, January.
    • Handle: RePEc:gam:jmathe:v:10:y:2022:i:3:p:292-:d:727542
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    References listed on IDEAS

    as
    1. José A. Carrasco-Gallego, 2020. "Real Estate, Economic Stability and the New Macro-Financial Policies," Sustainability, MDPI, vol. 13(1), pages 1-19, December.
    2. Per Bjarte Solibakke, 2021. "Forecasting Stochastic Volatility Characteristics for the Financial Fossil Oil Market Densities," JRFM, MDPI, vol. 14(11), pages 1-17, October.
    3. Peng Niu & Yanming Sun & Zhuping Gong, 2021. "Research on the Chaotic Characteristics and Noise Reduction Prediction of Information System Anomalies in Equipment Manufacturing Enterprises," Sustainability, MDPI, vol. 13(9), pages 1-20, April.
    4. G. Rod Erfani & Bijan Vasigh, 2018. "The Impact of the Global Financial Crisis on Profitability of the Banking Industry: A Comparative Analysis," Economies, MDPI, vol. 6(4), pages 1-13, December.
    5. Egidijus Bikas & Evelina Glinskytė, 2021. "Financial Factors Determining the Investment Behavior of Lithuanian Business Companies," Economies, MDPI, vol. 9(2), pages 1-19, April.
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