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March 2023 (published: 10.02.2023)
Number 1(52)
Home > Issue > Assessment of the Expected Outcome in the Formation
of the Financial Result: The Concept and Tools
Lisitsa M.I.
The subject of the study are the probability models to determine the expected financial result of the business activity of an enterprise for a single period of time. In this context the purpose of the work is to substantiate the effect stated in the subject of the article in the business activity of a commercial organization acting as an object of the research. The work is based on a synthesis of the tools of mathematical statistics and probability theory with the method of fundamental response testing (in the form of the expected effect for a single period of time and also the probability of achieving an uncovered loss, net profit, break-even) tochange of the influencing parameters (in the form of the number of true values of uncovered loss, net profit, break-even and also the probability of achieving an uncovered loss, net profit). A number of conclusions can be considered to be the result of the study. First, the assessment of the expected outcome seems to be a potentially attractive option for identifying the expected financial result, since it not only provides insight into the probability of occurrence of an uncovered loss, net profit, break-even, but also indicates the achievement of the most likely (expected) financial result. Second, the type of probable (expected) financial result is important, rather than its quantitative assessment, although it is also present. Third, there is a problem about the methodology, namely the unreliability of statistics within the constantly changing business conditions, on the basis of which the probabilities of outcomes are revealed. The fourth, the presented approach can potentially be in demand by the enterprises with a relatively long history of business activity, which are alsobound by the necessity for the development of the predictive assessment of the expected effect due to legislative requirements and/or due to the requirements of the statutory (constituent) documents.
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Keywords: Financial Result, Expected Outcome, Probability of Achievement, Net Profit, Uncovered Loss, Break-even, Expected Effect.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 336.67
Assessment of the Expected Outcome in the Formation
of the Financial Result: The Concept and Tools
The subject of the study are the probability models to determine the expected financial result of the business activity of an enterprise for a single period of time. In this context the purpose of the work is to substantiate the effect stated in the subject of the article in the business activity of a commercial organization acting as an object of the research. The work is based on a synthesis of the tools of mathematical statistics and probability theory with the method of fundamental response testing (in the form of the expected effect for a single period of time and also the probability of achieving an uncovered loss, net profit, break-even) tochange of the influencing parameters (in the form of the number of true values of uncovered loss, net profit, break-even and also the probability of achieving an uncovered loss, net profit). A number of conclusions can be considered to be the result of the study. First, the assessment of the expected outcome seems to be a potentially attractive option for identifying the expected financial result, since it not only provides insight into the probability of occurrence of an uncovered loss, net profit, break-even, but also indicates the achievement of the most likely (expected) financial result. Second, the type of probable (expected) financial result is important, rather than its quantitative assessment, although it is also present. Third, there is a problem about the methodology, namely the unreliability of statistics within the constantly changing business conditions, on the basis of which the probabilities of outcomes are revealed. The fourth, the presented approach can potentially be in demand by the enterprises with a relatively long history of business activity, which are alsobound by the necessity for the development of the predictive assessment of the expected effect due to legislative requirements and/or due to the requirements of the statutory (constituent) documents.
Read the full article
Keywords: Financial Result, Expected Outcome, Probability of Achievement, Net Profit, Uncovered Loss, Break-even, Expected Effect.
DOI 10.17586/2310-1172-2023-16-1-21-26