Input:
Decision variables
Sales volume
Production volume
New debt etc. Input:
Given parameters
Sales price/unit
Production cost/unit
Amortization ratio etc. Input:
Logical restrictions
Inventory ≥ 0
Fixed assets ≥ 0
Debt ≥ 0 etc. Computations/Output:
Multi-period financial statements
Balance sheet
Statement of income
Some elements of Cash flow statement Output:
Firm valuation:
Sum of discounted future Net Income Input:
Historical accounts
Balance sheet
Firm valuation - Work schedule
Build a model for multi-period financial statements for the given case
Include the basic accounting logic
Link to the historical accounts
Link to the input elements (Decision variables, parameters)
Begin with the status quo i.e. no transactions
Check that the balance sheet is in balance
Add one decision/transaction at a time, link in all its effects and check the consistency of the balance sheet before continuing
Compute the company value as a sum of discounted net income over the planning period
Select a company to evaluate
Enter the historical accounts
Enter the parameters corresponding to the selected company
Fill in the decision variables according to your judgment as a company valuator
Compute the company value
Large Scale Techno-Economic Firm Planning
Key elements Optimal Firm Planning Dynamic Firm Models
(Monetary Process) Real Process Forecasting
Neural Nets
Nonlinear Models Optimization
Fuzzy Sets
Genetic Algorithms Computation
PC-applications (interface)
High Performance CPU (CSC) Parallel Processing
(1) MIMD / SUPER machines
(2) Joint research
CSC - support:
Key Features:
The necessary financial relations included
Free specification of planning horizon
Simulation and optimization combined
Guaranteed feasibility
A flexible optimization module written as a dynamic link libary (DLL) in strict ANSI C.
Problem formulation:
Strategic Firm Planning Model
Financial decision variables
Constraints on decision variables
Fundamental financial constraints
Balance sheet relationships
Goal functions
Multi-period optimization problem - solving in LINGO
Decision variables
Sales volume (SALEVOL)
Production volume (PRODVOL)
New debt (NEWDEBT)
Repayment (REPAY)
Investments (INV)
New issues (NEWISSUE)
Dividends (DIV)
Depreciation (DEP)
Deviation variables
Min dividend deviation (DIVDIFF)
Max dividend deviation (MAXDIVDIFF)
Equity deviation (EQUITYDIFF)
Debt/Equity deviation (DEDIFF)
Repayment deviation (REPDIFF)
Financial statement
Fixed assets
Value items
Inventory
Sales receivable
Cash
Other financial items Shareholders´equity
Other restricted equity
Net income of the year
Other unrestricted equity
Value items
Accumulated depreciation difference
Reservations
Current liabilities
Long-term debt
Statement of income + Turnover
- Operating costs
- Changes in inventory
- Depreciation
- Interest expenses
+ Other financial income
+ Extraordinary income and expenses
+ Allocations
- Taxes
= Net income
Constraints on decision variables 2. Repayment level
MINIMIZE
Constraints on decision variables 3. New issues - upper bound
MINIMIZE
Constraints on decision variables 4. Dividends
MINIMIZE
Constraints on decision variables 5. Depreciation - lower bound
Fundamental Financial Constraints 1. Cash - nonnegative
Cash flow:
+ Turnover - Change in sales revenues
- Costs - Change in other financial assets
- Interest expenses + Change in current liabilities
+ Other financial income + New debt
+ Extraordinary income - Repayment
- Dividends - Investments
Fundamental Financial Constraints 2. Fixed assets- nonnegative
Fundamental Financial Constraints 3. Long-term debt- nonnegative
Comments