Three Innovative Methods for Evaluating Corporate Cash Flows: The Extended Net Present Value Criterion, the Smooth Pasting Condition, and the Markowitz Model

Marco Desogus () and Elisa Casu ()
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Marco Desogus: Department of Law, University of Sassari
Elisa Casu: Independent Economist

A chapter in Economics and Finance Readings, 2025, pp 197-217 from Springer

Abstract: Abstract This chapter has the aim of providing a privileged perspective on cash-flow dynamics in the context of business analysis—whether evaluative or diagnostic—in general and comparatively across each business segment. In particular, the discussions presented focus on cash-flow volatility by adopting procedures that appear relevant and promising for the above purposes, whilst they are also attempting to adapt—with the auspice of contributing to scientific and technical process innovations on the topic—some models, typically applied to securities finance, more specifically to flows linked to business and the corporate finance. After an introduction to the issues addressed, three thematic sections propose an estimation method using the Extended Net Present Value (XNPV), a risk-weighting approach through the value matching criterion, and the smooth pasting condition. Finally, processes borrowed from fractal finance and an extension of the Markowitz model are applied.

Keywords: Cash-flow volatility; Risk management; Corporate assessments; Extended NPV; Value matching criterion; Smooth pasting condition; Fractal analysis; Markowitz model; C13; G32; M41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-96-6998-1_11

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DOI: 10.1007/978-981-96-6998-1_11

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