Volume 03 Issue 11-2023
280
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
A
BSTRACT
This article is based on the need and relevance of developing a financial strategy in joint stock companies.
The prospects and advantages of using multiplier coefficients when making decisions on financial strategy
are described. A scientific proposal and practical recommendations for improving the mechanism for
developing financial strategy in joint-stock companies have been formulated.
K
EYWORDS
Strategy, financial activity, multipliers, financial risk, financial management, arbitrage price, capital, cost,
income, models.
I
NTRODUCTION
As one of the structural directions of the doctrine
of economic development in foreign countries,
the issue of improving the mechanisms and
strategies of financial management of national
companies in accordance with changes and
trends in the external environment has an
important place. Since the beginning of 2022,
"TOP-100 companies in the world have had to
cancel deals worth 45 billion US dollars as a result
of the influence of external economic and political
factors, while in Europe and the USA alone, the
volume of investment attraction has increased by
90% due to the cancellation of contracts on the
practice of initial public placement of shares.",
and in the world it decreased from 283 billion US
dollars to 81 billion US dollars or 70%" [7]. In
Journal
Website:
http://sciencebring.co
m/index.php/ijasr
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Research Article
IMPROVING THE PRACTICE OF USING MULTIPLIER
COEFFICIENTS IN FORMING FINANCIAL STRATEGIES
Submission Date:
November 15, 2023,
Accepted Date:
November 20, 2023,
Published Date:
November 25, 2023
Crossref doi:
https://doi.org/10.37547/ijasr-03-11-46
Omonullo Nematullaevich Khamdamov
Associate Professor, Doctor Of Economics, Department Of Corporate Finance And Securities, Tashkent
Financial Institute, Uzbekistan
Volume 03 Issue 11-2023
281
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
such conditions, in order to maintain the stability
of financial results at a minimum level, it is
necessary for companies to improve the financial
management mechanism, in particular, to
transform the corporate financial system, to
correctly assess the capital structure and existing
opportunities, to forecast the level of financial
risk, and to diversify investment directions.
A number of normative legal documents on the
organization and improvement of the modern
financial management system in joint-stock
companies operating in Uzbekistan have been
adopted, and a solid legal framework covering the
organization and development of the activities of
joint-stock companies, their infrastructure,
further increasing their participation in the
capital market, and other financial and
investment aspects was created. In the
development strategy of New Uzbekistan for
2022-2026, "gradual liberalization of capital
movement in our country and privatization of
large enterprises and their shares (shares),
including through the stock exchange, and further
liberalization of leading sectors of industry and
the economy, as well as completion of
transformation processes" [1] economy defined
as one of the main goals in the field.
Accordingly, coordination of corporate financial
policy in accordance with changes in the external
environment, introduction of international
modern methods of financial management,
effective use of additional instruments in the
formation of financial strategies, development of
relations with the financial market in the
formation of additional sources of financial
support, introduction of international standards
in financial risk management, capital structure
implementation of scientific research on the
implementation of financial technologies in
optimization is one of the current issues.
Review of literature on the subject
A number of studies have been carried out by
domestic and foreign economists on the economic
importance of developing financial strategies and
improving their theoretical and fundamental
foundations in ensuring financial stability in joint-
stock companies and improving the modern
corporate management mechanism. Most of these
studies have been carried out with a company-
wide approach, and a certain part is focused on
the scientific basis of developing financial
strategies as a result of the influence of
macroeconomic factors.
The mechanism of financial strategy is used for
systematic analysis of financial activity while
gaining importance in increasing the market
value of the company. It is possible to assess the
prospective development trends of the company
on the basis of ensuring the implementation of
priority tasks defined in the financial strategy in
real conditions [2]. Financial strategy represents
the way to achieve and maintain business
competitiveness and develop the company as an
international organization. Financial strategies
are goals, models, or alternative choices aimed at
further improving and optimizing financial
management to achieve corporate results [3].
According to Blank, "Financial strategy is the
functional strategy of the enterprise, which forms
Volume 03 Issue 11-2023
282
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
long-term financial goals, determines all the main
directions of development of its financial
activities and financial relations by choosing the
most effective ways to achieve them, forms and
uses financial resources in the conditions of
changing external factors. is one of the most
important types" [4]. Corporate strategy refers to
the general activity of the entire company, while
functional strategy refers to the specific function
of the company within the general strategy. On
the other hand, the financial strategy is functional.
Therefore, its main purpose is to increase
efficiency by attracting capital [5]. Khominich's
scientific
work,
"Financial
Strategy
of
Companies", defines the financial strategy as a
generalizing model of actions necessary to
achieve the goals set within the framework of the
corporate mission by coordinating, distributing,
and using the company's financial resources [6].
The financial strategy can be approached as a
subsystem of the general strategy that presents a
long-term program of specific actions to
implement the concept of using the company's
own and debt funds to achieve a strategic
competitive advantage. Therefore, in the
definition given to financial strategy, it is possible
to see the harmony of the relationship between
strategic and financial management [7].
According to Borisova and Sychev, the financial
strategy can include two components: a targeted
financial strategy and a financial strategy for the
use of capital. Each of these strategies has its own
content and characteristics. In particular, the
target financial strategy can be approached as a
strategy for increasing the company's market
value, a strategy for increasing the volume of
(product) sales, and a strategy for maximizing
profit. In turn, the financial strategy for the use of
capital is considered a strategy of self-financing
and a strategy of financial investments [8], in the
studies carried out by Kh. Akhmedov, the
principle of viewing the enterprise as an open
system capable of self-organization reflects an
open and clear system interrelated with external
factors for the development of the financial
strategy of the enterprise in the process of
strategic management. It is stated that such an
interdependence process of the enterprise
requires suitable space, time, and functional
content in the conditions of the market economy
[9].
R
ESEARCH METHODOLOGY
In the conducted research, scientific research,
generalization, grouping, comparative methods,
economic analysis, statistics, expert assessment,
comparative comparison, observation and other
methods of the methodological basis of the
formation of the capital assessment of joint-stock
companies were used.
R
ESULTS AND DISCUSSION
Another important condition for the effective use
of capital in joint-stock companies is the proper
organization of the project financing and
forecasting mechanism. It is known from the
results of the analysis that today the central
forecasts and econometric studies on the future
strategies of most joint-stock companies and their
achievement have not been developed.
Volume 03 Issue 11-2023
283
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
Table 1
Models of assessment of capital value of joint-stock companies
No
of the model to
be named
Briefly description
Determination
1
Cumulative
model
(BUM-Build-Up
Method)
The impact of systematic and unsystematic
risks is taken into account when assessing
the value of the company's capital.
𝐸𝑅
1
= 𝑅
𝑓
+ 𝑅𝑃
𝑚
+ 𝑅𝑃
𝑠
+ 𝑅𝑃
𝑢
2
Permanent
growth model
(Gordon model)
Capital appreciation financial assets
according to payable revenues of the
amount g- percent per annum at the rate
grow up to go based on to be considered
mean holds
𝑉
𝑠
=
𝐷𝐼𝑉
𝑠
𝑃
𝑠
(
1 − 𝑒
ℎ
)
+ 𝑔; → 𝑔 = 𝑏 ∗ 𝑅𝑂𝐸
𝑉 = 𝑉
𝑡
+ 𝑉
𝑡+1
= ∑
𝐷𝐼𝑉
𝑡
(1 + 𝑟)
𝑡
𝑇
𝑡=1
+
𝐷𝐼𝑉
𝑡+1
(𝑟 − 𝑔)(1 + 𝑟)
𝑇
3
Arbitration rates
formation model
(Ross model)
the same assets different from grades use
the way with without risk income to get is
based on
𝑅
𝑖
̅̅̅
= 𝑅
𝑓
+ 𝑏
𝑖1
𝑅
1
+ 𝑏
𝑖2
𝑅
2
+ ⋯ + 𝑏
𝑖𝑛
𝑅
𝑛
+ 𝑒
𝑖
𝑅
𝑖
̅̅̅
= 𝑅
𝑓
+ (𝜆
𝑘
̅̅̅
− 𝑅
𝐹
)𝑏
𝑖𝑘
4
of income
internal to the
norm based
model
The value of most debt sources is
determined based on the sum of the total
amount involved and the payments made to
cover it.
∑
𝐶𝐹
𝑡
(1 + 𝑅)
𝑡
−
(
𝐷
0
− 𝑇𝐶
)
= 0
𝑁
𝑡=1
𝑘
𝐷
= 𝑅 ∗
(
1 − 𝑇
)
5
Capital assets
valuation model (
CAPM )
Financial of the asset demand done in
quantity profitability in determining this
financial to the asset exposure to market risk
level to determine mean holds _
𝑉 = 𝑅
𝑓
+ 𝛽
𝑢
(𝑅
𝑚
̅̅̅̅ − 𝑅
𝑓
) + 𝛽
𝑢
(𝑅
𝑚
̅̅̅̅ − 𝑅
𝑓
)
∗ (1 − 𝑇) ∗
𝐷
𝐸
Capital cost of JSC :
𝑉
𝐸
=
∑
𝐹𝐶𝐹𝐸
𝑡
(1 + 𝑟
𝐸
)
𝑡
𝑛
𝑡=1
)
6
Capital average
drawn cost (
WACC )
A joint stock company common value and
financial supply separately sources
according to value evaluation enable gives _
𝑊𝐴𝐶𝐶 = 𝑤
𝐸
𝑘
𝐸
+ 𝑤
𝐷
𝐾
𝐷
(1 − 𝑇)
of AJ value :
𝑉 = ∑
𝐶𝐹
𝑡
(1 + 𝑊𝐴𝐶𝐶)
𝑡
𝑛
𝑡=1
)
Source: Compiled by author based on research
Volume 03 Issue 11-2023
284
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
However, one of the important conditions for the
introduction
of
international
financial
management standards is the development of
promising strategies in joint-stock companies and
the importance of scientific approaches to it. In
the course of the research, we have provided
conclusions on the possibility of using the
methodological practice of evaluating the capital
value and the analysis of the multiplier
coefficients on the example of the joint-stock
company
"Uzmetkombinat".
Today,
in
international practice, there are several models
developed by leading scientists and international
rating companies in the evaluation of capital
value. We present the evaluation models that are
widely used in practice and the results of which
are considered important in the development of
promising strategies (Table 1).
It can be seen from Table 1 that there are different
methodologies for assessing the capital value of
joint-stock companies, in which financial
managers should take into account aspects such
as the characteristics of the joint-stock company's
industry, financial capabilities, and the extent of
its impact on changes in the external
environment. As a result of the research, the
advantages of using the Gordon and WACC model
and the reliability of the obtained results are
based on the example of the joint-stock company
"Uzmetkombinat" in the assessment of the capital
cost. Also, in the example of these joint-stock
companies, by performing a fundamental
analysis, information on the main multiplier
coefficients and their changes was obtained
(Table 2).
Table 2 allows forming general conclusions based
on the relationship between the efficiency
indicators and the multiplier coefficients of the
use of capital by the joint-stock company
"Uzmetkombinat".
In 2015-2017, the weighted average cost of
capital had an increasing trend, and it can be seen
that the main connecting factor is the increased
efficiency of the ROIC coefficient. Also, the growth
of the debt capital affects the change of the ROA
ratio, along with the direct growth of the financial
leverage ratio. As a result of the society's
modernization of means of production,
expansion, and diversification of investment
activities, the market capitalization increased by
more than 7 times and the revenue from product
sales increased by 8.5 times during 2015-2021.
This, in turn, led to positive trends in P/E, P/B,
P/S, and EV/S coefficients, which are the main
indicators of fundamental analysis.
have some shortcomings and problems in
establishing the practice of corporate evaluation,
determining efficiency coefficients in the
formation and use of capital, and using the
multiplier
coefficients
recommended
by
international standards or international rating
companies to determine the economic efficiency
of investment projects.
Table 2
Analysis of capital cost and multiplier coefficients of "Uzmetkombinat" JSC
Volume 03 Issue 11-2023
285
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
N
o
Indicators
2015
2016
2017
2018
2019
2020
2021
1.
WACC
17.6
18.4
17.2
19.8
25.2
23.1
24.1
2.
According to the
Gordon model
differentiation
+2.1
-3.2
+4.2
+2.3
-0.6
+2.8
+1.5
3.
Capitalization
volume ( billion
soums )
623.9
736.2
869.7
1401.6 1709.1 1986.5 4410.2
4.
Cumulative value
0.85 _
0.71
0.62
0.48
0.32
0.28
0.22
5.
Capital growth rate
(%)
21.5
13.3
129.3
50.9
27.6
14.6
78.9
6.
Debt of capital
percentage (%)
31.6
31.3
57.3
54.8
56.3
59.1
61.4
7.
Private of capital
percentage (%)
68.4
68.7
42.7
45.2
43.7
40.9
38.6
8.
P/E
166.62
83.44
76.12
14.69
15.33
22.35
3.52
9.
P/B
8.39
6.91
6.31
4.01
3.56
3.1
1.82
10.
P/S
5.56
4.63
2.65
0.98
1.56
1.75
0.8
11.
EV/S
5.96
4.43
3.68
1.25
1.58
1.54
0.92
12.
EV/EBIT
115.6
54.5
22.51
12.96
16.1
32.2
4.58
13.
ROA (%)
3.71
6.12
4.6
12.87
10.1
5.36
22.98
14.
ROE (%)
5.15
9.21
8.45
29.85
23.54
12.45
58.96
15.
ROIC (%)
4.96
9.25
23.98
28.7
17.2
7.6
41.2
16.
ROCE (%)
7.6
13.2
21.9
23.56
17.98
7.26
42.12
17.
D/E
0.46
0.46
1.34
1.22
1.28
1.44
1.57
18.
Net Debt/EBIT
5.21
2.12
3.69
3.12
4.56
9.56
1.89
Source: https://www.uzbeksteel.uz/ , https://www.uzse.uz/ - prepared by the author based on his
data.
Firstly, the preparation of financial reports of
joint-stock companies based on international
standards and presenting them to the general
public, secondly, the fact that some structural
indicators for determining multiple multiplier
coefficients are not available or not fully disclosed
in the methodology provided in the national
unified assessment standard, and thirdly, the
possibility of obtaining complete information on
the factors involved in the use of some
econometric models such as limited Also, the
widespread use of the cost approach, rather than
the income method, in assessing the capital value
Volume 03 Issue 11-2023
286
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
of most joint-stock companies shows that there
are problems in the assessment process.
C
ONCLUSION
In today's conditions of transformation and
privatization of economic sectors, one of the main
tasks facing the heads of executive bodies and
financial managers of joint-stock companies is to
pay special attention to strengthening the
financial condition of the joint-stock company in
the development of current and strategic goals, to
further increase the role and importance of
financial management in managing financial
stability,
to
monitor
financial
stability
organization and development, ¬effective use of
advanced experiences of foreign countries in the
organization of financial management.
Joint-stock companies operating in our country
today have some shortcomings and problems in
establishing the practice of corporate evaluation,
determining efficiency coefficients in the
formation and use of capital, and using the
multiplier
coefficients
recommended
by
international standards or international rating
companies to determine the economic efficiency
of investment projects. Firstly, the lateness of the
reforms regarding the preparation of financial
reports of joint-stock companies based on
international standards and presenting them to
the general public, secondly, the fact that some
structural indicators for determining multiple
multiplier coefficients are not available or not
fully disclosed in the methodology presented in
the national unified assessment standard, and
thirdly, some econometric models of financial
management instruments factors such as limited
availability of data on factors.
In national practice, the legal basis for
determining the market value of joint-stock
companies and the real value of financial assets
has been created, but in the process of
privatization
and
transformation,
the
determination of the market value of joint-stock
companies and the improvement of the
methodological aspects used in it are required.
Also, the provision of corporate transparency in
the legislative documents on the formation of the
sale price of joint-stock companies and the
determination of the (participating) factors
affecting it will lead to the creation of the same
opportunities for investors and shareholders.
The conclusions obtained based on the results of
the analysis carried out on JSC "Uzmetkombinat"
show that although some of the multiplier
coefficients in the initial stages of the analysis
period were lower than the established
international standards, it can be seen that the
coefficients related to the use of capital have a
high result. Estimating the efficiency of capital use
is a process that includes a mathematical-
statistical analysis consisting of several stages, in
which a conclusion about the efficiency indicators
should be made based on the results of each
algorithmic sequence. In this process, the
conclusion about the capital value is obtained by
comparing the shareholding with the multiplier
coefficients of the company and serves to make
the optimal decision on the use of financial
resources.
Volume 03 Issue 11-2023
287
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
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(ISSN
–
2750-1396)
VOLUME
03
ISSUE
11
Pages:
280-288
SJIF
I
MPACT
FACTOR
(2021:
5.478
)
(2022:
5.636
)
(2023:
6.741
)
OCLC
–
1368736135
15.
https://www.uzse.uz/ -
Тошкент РФБ
нинг расмий сайти.
