Application of Risk Analysis in Business Investment Decision-Making

Merková, Martina; Drábek, Josef; Jelačić, Denis

doi:10.5552/drind.2013.1317

Cited by 9 publications

(4 citation statements)

References 3 publications

(3 reference statements)

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“…An acquired decision affects the company's performance and its competitiveness for a long time. If a competent investor is interested in making a qualified investment decision, he must primarily determine the time and risk factors [41]. The beta coefficient is an integral component of the CAPM model that quantifies the relationship between systematic risk and the expected return.…”

Section: Literature Reviewmentioning

confidence: 99%

Quantification of Expected Return of Investment in Wood Processing Sectors in Slovakia

Kánová,

Drábek,

Ćurić

et al. 2023

Forests

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The study focuses on the selected aspects of investment measurement and management for the support of financial and economic decision-making of investors in wood-processing sectors. The aim of the study was to analyze the indicators for the structure and cost of capital of furniture and paper/forest branches in Slovakia, quantify the actual expected return on investment based on the selected methodology, and consequently find out the fundamental differences resulting from the specific conditions of given sectors. Methodologically, the study uses procedures for the weighted average cost of capital (WACC), capital asset pricing model (CAPM) for determining the cost of equity, and calculation of the beta coefficient considering the risk premium. The results of the study demonstrated a similar levered beta in both analyzed sectors (1.17 in furniture, 1.20 in paper/forest), but in each sector for a different reason. The expected rate of return is higher in furniture (7.84%) compared to paper/forest products at the level of 6.04%. The findings provide the possibility of comparing the required and expected rate of return on invested capital and making the appropriate long-term investment decisions.

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Section: Literature Reviewmentioning

confidence: 99%

Quantification of Expected Return of Investment in Wood Processing Sectors in Slovakia

Kánová,

Drábek,

Ćurić

et al. 2023

Forests

Self Cite

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“…This method was implemented in furniture manufacturing of wood with the objective to identify critical factor that affect the expected profit and cash flow in the execution of investment projects (Merková et al, 2013). The results of the sensitivity analysis of the project by changing the values of the project by ± 10 %, show that the main risk factors that cause the decrease in profit were the sale price, the volume of production, the cost of materials and the labor costs.…”

Section: Introductionmentioning

confidence: 99%

Improving strategic management through risk analysis: small palm (Elaeis guineensis) oil industrializers, Central America

Molina

Thompson

2020

Agron. Mesoam.

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Introduction. Palm cultivation allows oil to be obtained for human and industrial consumption. Some of its development has been achieved through associations of agricultural producers, who have had access to financing to build industrial plants for oil extraction and refinement, which is of great importance to the economy developing countries. Objective. To demonstrate how strategic and risk management influence the profitability and value of the small palm oil industrializer business. Materials and methods. Financial, technical, market, and production indicators were used in a price forecast model. The Monte Carlo simulation method was performed and a time series model was fitted to forecast the international price of palm oil. Subsequently, a univariate structural econometric model was adjusted to forecast revenue based on international price and other variables. Finally, a parameterized cash flow was developed that incorporated the results of the previous models to estimate the value of the business. Results. The international oil price forecast showed high volatility that directly affected the organization’s revenue forecasts and conveyed its effect to cash flows. The value of the business and equity was negative, and in the face of debt restructuring scenarios and the elimination of unproductive assets, they improved considerably. Conclusion. Low-diversified palm oil production companies had a high exposure to changes in international prices which, together with high levels of debt for fixed asset investments with long recovery periods, affect their cash flow, the value of the company, and its assets.

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“…The investment in learning and development of talents (Garavan et al 2012) has been justifi ed as a source of competitive advantage. Garavan (2012) concluded that external talent acquisition strategy has proven to be unsuccessful in the long run with many organisations (Merková et al, 2013). Lepak and Snell (1999) and Stacho and Stasiak-Betlejewska (2014) determined relative advantage of organisations developing their workforce internally.…”

Section: Uvodmentioning

confidence: 99%

Selection of Most Suitable Candidates for the Talent Pool in a Furniture Manufacturing Company

Ližbětinová

Hitka

2017

Drvna ind.

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Application of Risk Analysis in Business Investment Decision-Making

Cited by 9 publications

References 3 publications

Quantification of Expected Return of Investment in Wood Processing Sectors in Slovakia

Quantification of Expected Return of Investment in Wood Processing Sectors in Slovakia

Improving strategic management through risk analysis: small palm (Elaeis guineensis) oil industrializers, Central America

Selection of Most Suitable Candidates for the Talent Pool in a Furniture Manufacturing Company

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