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A diagnostic approach to corporate sustainability based on normalized net margins and extended present value

Author

Listed:
  • Desogus, Marco
  • Casu, Elisa

Abstract

Relying on indices and ratios for rigorous deterministic valuations entirely, present analysis models often fail to clearly and logically represent diagnoses of companies and the outcomes of transactions conducted in risk capital markets, particularly banks and other credit entities. Focusing on interactions between money, credit, production and income mechanisms, we propose alternate method for assessing businesses and determining their value at a certain time and the relative probability of insolvency. Replacing the static measures under which companies are normally evaluated, the method we propose outlines mathematical measures that normalize expected flows, positioning them against ‘extended present value’ to deepen the significance of income aspects to financial assessments.

Suggested Citation

  • Desogus, Marco & Casu, Elisa, 2019. "A diagnostic approach to corporate sustainability based on normalized net margins and extended present value," MPRA Paper 114363, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114363
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    More about this item

    Keywords

    portfolio analysis; risk management; business crisis; products-markets matrix; strategic planning; present value;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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