Financial Innovation for Assessing the Enterprise Capitalization

Abstract

Capitalization is one of the most popular criteria for assessing the success of the functioning and development of a business, because it widely characterizes the existing potential of an enterprise, the possibilities and prospects of its use. The article is devoted to determining the features of capitalization valuation based on the concept of the enterprise fundamental value. The research is based on the expanded content of the enterprise capitalization, which make it possible to argue the expediency of shifting the analytical focus from the processes of capital formation to its ability to provide the creation and growth of value flows. Traditional financial issues of enterprise capital appreciation are considered in the aspect of market value, which characterizes the enterprise mainly as an object of investment interest of subjects of financial and economic relations. Taking into account the dual value nature of the enterprise, the focus of the study has shifted to an organizational capacity to provide value formation and value, which is measured from a financial point of view on the basis of modified models of economic profit. The results of generalizing the practical experience of using such models testify to their high level of informativeness and adequacy, and high level of factor interpretation provides the possibility of continuous monitoring of critical points informing the dynamics of formation / destruction of value. Restrictions on the use of modified models of economic profit in the processes of capitalization based on fundamental value are not critical from the point of view of capital formation analysis. So, modified models of economic profit can be recommended for appropriate practical use. It was determined that capitalization based on fundamental rather than market value fundamentally changes the focus of management business analytics. In particular emphasis is placed on evaluating organizational capacity to deliver financial and economic results. Modified models of economic profit have been identified as effective analytical tools for such assessment.

Keywords

• capitalization
• fundamental value
• economic profit
• value added
• cash flows