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National Interests: Priorities and Security
 

The value-based method for crisis management

Vol. 13, Iss. 12, DECEMBER 2017

PDF  Article PDF Version

Received: 1 August 2017

Received in revised form: 14 September 2017

Accepted: 19 October 2017

Available online: 22 December 2017

Subject Heading: SUSTAINABLE DEVELOPMENT OF ECONOMY

JEL Classification: L11, L25

Pages: 2256–2272

https://doi.org/10.24891/ni.13.12.2256

Shmeleva E.M. Penza State University, Penza, Russian Federation
ek.m.shmeleva@gmail.com

Importance The costing function of corporate finance corroborates the significance of value-based indicators for the financial position assessment. Value-based indicators describe the performance of entities and fulfillment of one of the key corporate finance functions. They also can characterize innovations of the construction entity since its innovative and investment development is aimed to derive as high profit as possible.
Objectives I select the best-fit tools for the value-based assessment of the entity's financial position. I determine the set of indicators to be used in the assessment of the corporate financial position and crisis management.
Methods Studying the application of value-based indicators to the assessment of the corporate financial position and crisis management, I use methods of logic, statistical analysis, theory of information, historical comparison, and methods of expert assessments and analogies.
Results In the Penza oblast, construction companies do not have stable performance indicators. As the analysis shows, most entities in the construction sector did not create value added during the analyzable period, but rather consumed it. In the long run this situation may result in a dramatic drop in corporate value and outflow of investment.
Conclusions and Relevance Even if absolute or value-based indicators are independently used, it will not resolve all issues of crisis assessment and monitoring. If the economic value added (EVA) is used for a certain period, this may trigger insufficient or excess investment in making short-term decisions. For purposes of crisis assessment, it is reasonable to combine the relative ROCE and absolute EVA.

Keywords: crisis management, crisis assessment, value-based metrics, financial position

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