This article is cited in 1 paper

Control in the socio-economic systems

The control parameters investigation of the company value analytical model: growth of strong, fall of weak

O. I. Dranko^a, V. S. Filimonov<sup>b

a</sup> Moscow Institute of Physics and Technology, Dolgoprudny
^b Moscow

Abstract: This paper describes income approach based analytical model of enterprise value that allows to select desired company parameters for company value increase. Profitability, required capital intensity, sales growth rate are found out as key parameters. Non-monotonic behavior for a sales growth rate parameter is discovered. There is also a possibility of division of companies into two classes: “strong” companies can generate positive cash flow and create value, and “weak” companies can't generate positive cash flow due to low profitability and/or significant requirements to investments and have negative value. Hence discovered that value concept leads to strong company differentiation and an average Russian company is in a losing state.

Keywords: business valuation, financial forecasting, cash flow, modelling, optimization.

UDC: 658.15(075.8)