Optimization of the Equity in Formation of Investment Portfolio of a Shipping Company

Oleg Bazaluk, Vlada Zhykharieva, Olga Vlasenko, Vitalii Nitsenko, Dalia Streimikiene and Tomas Baležentis
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Oleg Bazaluk: Belt and Road Initiative Institute for Chinese-European Studies, Guangdong University of Petrochemical Technology, Maoming 525000, China
Vlada Zhykharieva: Department of Economics and Finance, Educational and Scientific Institute of Marine Business, Odessa National Maritime University, 65029 Odessa, Ukraine
Olga Vlasenko: Department of Economics and Finance, Educational and Scientific Institute of Marine Business, Odessa National Maritime University, 65029 Odessa, Ukraine
Vitalii Nitsenko: SCIRE Foundation, 00867 Warsaw, Poland
Dalia Streimikiene: Institute of Economics and Rural Development, Lithuanian Centre for Social Sciences, A. Vivulskio Str. 4A-13, LT-03220 Vilnius, Lithuania

Mathematics, 2022, vol. 10, issue 3, 1-15

Abstract: The development of shipping companies relies on multiple financing channels and requires decisions to be made regarding fleet management. Therefore, a firm’s performance should be modeled based on multiple decision variables. The purpose of this paper is to develop a quantitative approach for determining the investment portfolio of a shipping company taking into account the equity value. The proposed model rests on the mathematical programming. The objective is to maximize the cumulative free cash flow to equity, associated with the implementation of a long-term fleet replenishment program. The distinctive feature of the approach is that different cost of debt financing options and different levels of starting capital are considered. The enterprise can then be determined based on the optimal value of free cash flows to equity for each ratio of starting capital and the number of acquired vessels.

Keywords: investment portfolio; debt financing; optimization; equity value; shipping company (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
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