Cash Flows

The main aspects of using the method of real options in substantiating the innovation and investment project are considered in the article. It was found that for the development and implementation of innovation and investment projects it is advisable to use the method of real options (ROV), which allows informed management decisions even in conditions of high uncertainty, as it can significantly increase the potential economic efficiency of investment projects. Two main methods are used to estimate the value of real options: the Black-Scholes option valuation model and the binomial model. The article describes the algorithm for implementing the methodology for evaluating an innovation and investment project with venture financing based on the method of real options. It is shown that investment projects initiated but not yet implemented by the firm increase its value by an amount equal to the sum of the prices of real options for cash flows of these projects.

The paper considers conceptual, methodical and practical aspects of the target financial analysis at the micro level, i.e., the company level, as a new instrument of anticrisis financial management for a company to overcome its financial difficulties and enhance its financial position within a time-period of practically any length. The methodology of the research, the results being presented in the paper, is based on the concept of the financial ratio analysis, the concept of the company cash flows, and the concept of the Balanced Scorecard (in terms of its financial score). It is depicted that the procedure of the target financial forecasting comprises an appropriate information-accounting support, a target financial forecasting of the company financial position, a target forecasting of the company's cash flows, a development of the specific events (managements' decisions) aimed at overcoming the company's financial difficulties and enhancing its financial position. The author has stated that in the present-day environment the target financial forecasting is an effective instrument of the financial forecasting that enables to set up the base for overcoming the company's financial difficulties and strengthening its financial position. The major fields of the target financial forecasting application are an anticrisis bankrupt company management, a management of the company at the verge of its bankruptcy, as well as a company's investment appeal enhancement (in terms of its financial aspect).

Actuaries are professionals who apply mathematics to financial problems. They evaluate the financial implications of contingent events, in other words, events that are not certain to occur. They are often involved in managing the risks that can arise from undesirable contingent events. Actuaries evaluate the likelihood of future events. They also design ways to reduce the financial impact of undesirable events that do occur. To do their work, actuaries must have a high level of technical knowledge. For example, they need to understand the nature of insurance, the risks inherent in different types of assets, the ways in which statistical models can be used, and the legal and regulatory constraints that apply to the business. They must also have good business sense, problem solving skills, and the ability to communicate effectively with others. Their work often affects many stakeholders, so they must be able to balance different interests and observe high ethical standards in doing so...

We argue that high accruals are likely to be the outcome of rules with an income statement perspective, while low accruals are likely to be the outcome of rules with a balance sheet perspective, and that this has implications for the properties of earnings. Specifically, earnings persistence is affected both by the magnitude and sign of the accruals. Accruals improve the persistence of earnings relative to cash flows in high accrual firms, but reduce earnings persistence in low accrual firms. We show that the low persistence of earnings in low accrual firms is primarily driven by special items. We then show that special item-low accrual firms have higher future stock returns than other low accrual firms. This is consistent with investors misunderstanding the transitory nature of special items. Further analysis reveals that special item-low accrual firms have poor past performance and declines in investor recognition (analyst coverage and institutional holdings). Special items continue to explain future returns after controlling for these factors.

ABSTRACT: The present article is the result of the observation, analyses and personal conclusions over the development of the IFRS at global level, their impact over the national and international companies all over the world and, nevertheless, the informational inputs from the Financial Statements which must be defined by the level of their transparency, relevance and comparability. The authors ’ intention through this article was to define the transparency of the Financial Statements imposed by the General Framework, IFRS, IAS, IFRIC, SIC, guides of interpretation, case studies and conclusions. In which way the Financial Statements could be transparent and relevant when 4 of the 5 components of the Financial Statements are flooded by numbers that have no meaning for those with no specific skills and knowledge? The answer is given by IFAC through the Accounting Policies and Explaining Notes. It’s a matter of economic general knowledge and know-how concerning the IFRS area of intere...

The primary goal of this Focus Note is to raise awareness in the microfinance sector of the issues associated with foreign exchange risk. First, it explains what exchange risk is. Second, it looks at the techniques being employed by microfinance institutions (MFIs) and investors to manage this risk. Finally, it makes recommendations on managing or avoiding exposure to exchange risk. Many borrowing MFIs are not adequately managing their exposure to foreign exchange rate risk. There are at least three components of foreign exchange rate risk: 1) devaluation or depreciation risk; 2) convertibility risk; and 3) transfer risk. Since MFIs operate in developing countries where the risk of currency depreciation is highest, they are particularly vulnerable to foreign exchange rate risk. And, as any veteran of the sovereign debt restructurings of the 1980s and '90s is likely to observe, convertibility and transfer risks, although less common than devaluation or depreciation risk, also occ...

Even the most mature microfinance institutions (MFIs) need to pay attention to their balance sheet to manage financial risks. All financial institutions take risks to make money. Risk management helps determine the appropriate balance between risk and reward. As MFIs diversify their funding sources, sound asset and liability management (ALM) is critical to help MFIs assess and manage financial risk. The current global financial crisis highlights the importance of good ALM. As funds become increasingly scarce and expensive, liquidity management becomes ever more important. The crisis has also underlined issues around leverage: while increased borrowing can help an institution increase its returns, it also exposes the institution to greater risk (as the many overleveraged institutions caught up in the current crisis know all too well). But none of these issues is a simple switch that can be flipped on or off- they involve balancing priorities and, for most MFIs, managing a mosaic of f...

ANALELE ŞTIINŢIFICE ALE UNIVERSITĂŢII „ALEXANDRU IOAN CUZA” DIN IAŞI Tomul LV Ştiinţe Economice 2008 ... its' interpretation and the relation with the fiscal-budgetary policy; continuing, in the third and fourth paragraph we study the impact of fis-cal-budgetary policy ...

Vietnam has made progress to improve oversight and control over cash balances for the state budget. The current arrangement however falls short of a treasury single account (TSA), which has led to inefficiencies in the management of cash balances and higher than necessary borrowing costs. In response to this, the Government of Vietnam has embarked on reforms to adopt a TSA and strengthen overall cash management. This policy note provides a review of progress in implementing a TSA system in Vietnam, the remaining challenges and obstacles, and how to overcome these for further TSA and cash management reforms. It is the product of ongoing discussions between the World Bank and the Ministry of Finance. Part A gives background and motivation; part B provides an overview of the state treasury system in Vietnam; part C reviews the progress in establishing a TSA, including against benchmarks of international good practice, and makes recommendations for priority next steps; and part D conclu...