Integrating Linear Regression and Multi-Criteria Decision Making for Assessing Financial Statement Risks in Manufacturing Firms

Duaa Abdullah and Marwa Abdullah

Papers from arXiv.org

Abstract: Evaluating the financial performance of manufacturing firms requires consideration of both the time value of money and the relative importance of multiple decision criteria. Conventional approaches relying solely on deterministic discounting often fail to account for interactions among economic, operational, and managerial factors. This study proposes an integrated framework that combines time-discounted economic analysis with linear regression to evaluate control system efficiency. A theoretical discounting model is first developed to convert costs and benefits occurring at different times into present-value terms using compound interest functions. The model accommodates one-time expenditures, time-proportional costs, and complex cost structures arising during system development and commissioning. To empirically assess how discounted economic performance is influenced by multiple criteria, linear regression serves as the approximation method.

Date: 2026-02
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