Risks in business assessment in the age of cyclicity of financial and economic crises

Kovalenko Victoria
D.Sc. (Economics), Professor, Professor, Department of Banking, Odessa National University of Economics, Odessa, E-mail:kovalenko-6868@ukr.net, ORCID ID: https://orcid.org/0000-0003-2783-186X

Gaguz Vitaly
Candidate of Economic Sciences, Director of the Department of Valuation and Mortgage Operations of PAT «Pivdenny», Odessa, E-mail:vitaliy.gagauz@pivdenny.ua, ORCID ID: https://orcid.org/0000-0002-3876-7771

Cite this article:

Kovalenko V., Gaguz V. (2021) Risks in business assessment in the age of cyclicity of financial and economic crises. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Ryzyky v otsintsi biznesu v epokhu tsyklichnosti finansovo-ekonomichnykh kryz; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 9-10 (286-287), pp. 33-42.

Abstract

The purpose of the article is to update the method of assessing business in a crisis in the economy. The purpose of the article determined the list of the following tasks to achieve it: to determine the conditions of crises in the economy; establish directions for managing financial and economic security in the economy through a realistic assessment of business capitalization; identify methods to ensure the veracity of business valuation; to update the methodological apparatus of business evaluation in terms of risk assessment of the discount rate, to propose methodological principles for determining the value of business in the face of crises in the economy. The methods used in the article using a comparative analysis of risk assessment tools for doing business in a cyclical development of financial and economic crises, factor analysis of the crisis and the factors of its impact on doing business. Results of the article. The article periodization was carried out the occurrence of crisis phenomena in Ukraine and substantiates the cycles of their occurrence. The preconditions for the crisis of 2008 are revealed in detail. The main approaches to business evaluation are revealed. It is proved that in all crises, there are similar consequences that directly affect the conduct of business, namely: a fairly short cycle of 6-10 years, with a tendency to even greater reduction; cooling of the economy and business activity; reduction of purchasing power; devaluation of the national currency; falling GDP. The article proves that in the conditions of the new "normality", based on the above analysis, there is an urgent need to unify the risk structure and renew approaches to the construction of cash flows and discount rates within the DCF model. The practical significance of this work is to bring the authors' proposals to the constant conclusion that when forming a business plan, cash flow should be planned with a cyclical decrease in revenue and increase risk.

Keywords

crisis, business, revenue, risks, cyclicality, discounting.

JEL classification: G210; DOI: 10.32680/2409-9260-2021-9-10-286-287-33-42

UD classification: 336.717:330.1317

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