COMPANY FINANCIAL PERFORMANCE PREDICTION ON ECONOMIC VALUE ADDED MEASURE BY SIMULATION METHODOLOGY

Measurement, analysis, planning of company and sector financial performance is undoubtedly one of crucial instrument and problem of financial managing. There are methodologies of financial performance described and verified in the paper. Calculation and decomposition of EVA measure is described according to relative value spread approach. Typology of stochastic processes and methods of statistical estimation of parameters are explained. Since EVA measure is decomposed by pyramidal method as non-linear function of financial ratios, forecasting is carry out by Monte-Carlo simulation procedure due to Choleski algorithm. Verification of EVA on monthly data of the machinery company was investigated and particular case study of EVA measure prediction is explained. Stochastic processes of Arithmetic or Geometric mean reversion processes are estimated by Mean Square Estimation method. Simulation Monte Carlo method is applied and presented including graphical representation. Parameters (mean, median, quintiles) of forecasted distribution function are calculated and results discussed. Results can serve for decision-making and give reliability intervals of future EVA value. Possibility of EVA forecasting by simulation Monte Carlo method was verified.