Managing investment revenue

Murat Kizildag, Nelson Barber and Ben K. Goh

International Journal of Revenue Management, 2010, vol. 4, issue 2, 195-210

Abstract: Assumptions used by investors when determining the value of an asset portfolio may result in large discrepancies. Creating a portfolio of assets must be linked to some measure of value, and this value was driven by the long-term cash flow ability of the assets. One of the most influential economic theories is the modern portfolio theory (MPT) with a consideration to maximising discounted or expected returns. This approach is similar to revenue management, with a goal of optimising goods at different prices, points in time or baskets of features. This paper suggests portfolio management is an alternative approach to revenue management emphasising risk minimisation, revenue maximisation and stakeholder's value. The proposed revenue maximisation strategy considers segmentation of the equity value for 18 restaurant companies. Values were compared to current market values, with two portfolios created. Results indicated 10% revenue return and when growth sensitivity was considered, there was a significant difference between the two portfolio returns.

Keywords: valuation; cash flow; investment revenues; asset portfolios; investors; value determination; value measurement; modern portfolio theory; revenue maximisation; discounted returns; expected returns; goods optimisation; prices; points in time; baskets of features; risk minimisation; stakeholder value; segmentation; equity value; chain restaurants; market values; hospitality industry; growth sensitivity; USA; United States; revenue management (search for similar items in EconPapers)
Date: 2010
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