Use of roadmaps of evaluation to diagnose the financial viability of long-term investment alternatives

Authors

  • Mario José Montini Pontifícia Universidade Católica de São Paulo - PUC-SP
  • José Odálio Dos Santos Pontificia Universidade Católica de São Paulo - PUC-SP

DOI:

https://doi.org/10.19094/contextus.v15i1.875

Abstract

This research addresses the contribution of a standardized roadmap to qualify decision-making on the financial viability of long-term investment alternatives. For this, it uses a case study of a company that produces promotional videos for TV and Internet, reanalyzed by an international consulting firm. The main limitation for the reanalysis of the investment was the contracting company having restricted the scope of the work to an economic-financial evaluation study without providing information of competition, market research or commercial strategy. In this context, questionable internal data were taken into account such as assumptions, projections and arbitrated data. Consequently, if the reanalysis of the investment were both hinged upon the stages of the proposed evaluation roadmap and complemented by market strategy information, it would certainly contribute to reducing the risk of the investment.

Author Biographies

Mario José Montini, Pontifícia Universidade Católica de São Paulo - PUC-SP

Mestre em Administração (Finanças) pela Pontifícia Universidade Católica de São Paulo - São Paulo-SP - Brasil.

José Odálio Dos Santos, Pontificia Universidade Católica de São Paulo - PUC-SP

Livre Docente em Administração (Finanças) e Pós-Doutorado em Administração (Finanças) pela USP. Doutorado em Administraçã (Finanças) pela EAESP FGV-SP e Mestrado em Administração (Finanças) pela Pontifícia Universidade Católica de São Paulo – São Paulo-SP - Brasil.

References

ALKARAAN, F.; NORTHCOTT, D. Strategic capital investment decision-making: a role for emergent analysis tools? A study of practice in large UK manufacturing companies. The British Accounting Review, 38(2), p. 149-173, 2006. doi: 10.1016/j.bar.2005.10.003.

ASSAF NETO, A. A superioridade do Método do Fluxo de Caixa Descontado no Processo de Avaliação de Empresas. São Paulo: Instituto Assaf, 2008.

BANCO DO BRASIL. Roteiro para Elaboração de Projeto de Investimento. 2014. Disponível em: <http://www.bb.com.br/docs/pub/emp/mpe/dwn/RoteiroAempresarial.pdf>. Acesso em: 12 dez. 2014.

BNDES. Roteiro de Informações para Apresentação do Projeto. 2010. Disponível em: <http://www.bndes.gov.br/SiteBNDES/bndes/bndes_pt/Institucional/Apoio_Financeiro/Produtos/FINEM/analise.html>. Acesso em: 12 dez. 2014.

BOCK, K.; TRÜCK, S. Assessing Uncertainty and Risk in Public Sector Investment Projects. Australia: Macquarie University, 2011.

BOWER, J. L. Managing the resource allocation process. Boston: Harvard Business School Press, 1970.

BRIGHAM, E.F.; EHRHARDT, M.C. Administração Financeira. 14. Ed. São Paulo: Cengage Learning, 2017.

CARR, C.; KOLEHMAINEN, F; MITCHELL, K. Strategic investment decision making practices: a contextual approach. Management Accounting Research, 21(3), p. 167-184, 2010. doi: https://doi.org/10.1016/j.mar.2010.03.004.

DAMODARAN, A. Investment valuation: tools and techniques for determining the value of any asset. John Wiley & Sons, Inc. 1996.

DAMODARAN, A. Real Options, Acquisition Valuation and Value Enhancement. Valuation Lecture Note, Packet 3. 2013.

DIAS, M.A.G. Análise de Investimentos com Opções Reais e Jogos de Opções. PUC-RJ, 2005. Disponível em: <http://marcoagd.usuarios.rdc.puc-rio.br/monte-carlo.html>. Acesso em: 24 set. 2012.

DIXIT, A.K.; PINDYCK, R.S.P. Investment under Uncertainty. Princeton, N.J.: Princeton University Press, 1994.

EUROPEAN COMMISSION – Directorate General Regional Policy. Guide to Cost-Benefit Analysis of Investment Projects. European Union. Brussels, 2008. Disponível em: <http://ec.europa.eu/regional_policy/sources/docgener/guides/cost/guide2008_en.pdf>. Acesso em: 12 dez. 2014.

FOLTA, T. B.; O’BRIEN, J. P. Entry in the Presence of Dueling Options. In: International Annual Conference On Real Options, 6., jun. 2002, Paphos, Cyprus. Anais eletrônicos.

GRUNDY, T.; JOHNSON, G. Managers’ perspectives on making major investment decisions: The problem of linking strategic and financial appraisal. British Journal of Management 4(4), 1993.

HICKSON, D. J.; BUTLER, R. J.; CRAY, D.; et al. Top decisions: Strategic decision-making in organizations. Oxford: Blackwell; San Francisco: Jossey-Bass, 1986.

JACKSON, S.; SAWYERS, R. Managerial Accounting: A focus on Decision Making. 5. Ed. Mason: South Western Cengage Learning, 2008.

KEYNES, J. M. The general theory of employment. The Quarterly Journal of Economics, February, v. 14, p. 109-123, 1937.

KNIGHT, F. H. Risk, Uncertainty and Profit. Londres: Houghton Mifflin, 1921.

MOHENDROO, M. Some Common Mistakes to Avoid in Estimating and Applying Discount Rates. Deloitte, Spring 2014.

MYERS, S.C. Determinants of Corporate Borrowing. Cambridge, USA: Sloan School, MIT, 1977.

PIKE, R. H. A longitudinal survey on capital budgeting practices. Journal of Business Finance and Accounting, v. 23, n. 1, p. 79-92, 1996.

PORTER, M. Competição: estratégias competitivas essenciais. 7. Ed. Rio de Janeiro: Campus, 1999.

PORTER, M. Estratégia Competitiva: Técnicas para Análise de Indústrias e da Concorrência. Rio de Janeiro: Elsevier, 2004.

PRATT, S.P.; NICULITA, A.V. Cost of Capital: Workbook. 2. Ed. New Jersey: John Wiley & Sons, Inc, 2002.

RYAN, P. A.; RYAN, G. P. Capital budgeting practices of Fortune 1000: how have things changed? Journal of Business and Management, v. 8, n. 4, p. 355-64, 2002.

SANTOS, J.O. Valuation (Um Guia Prático): Metodologias e Técnicas Para Análise de Investimentos e Determinação do Valor Financeiro de Empresas. São Paulo: Saraiva, 2014.

SANTOS, J.O. Análise de crédito. 6. Ed. São Paulo: Atlas, 2015.

SOUZA, A.; CLEMENTE, A. Decisões Financeiras e Análise de Investimentos. 6. Ed. São Paulo: Atlas, 2009.

STEARNS, Bear. Discounted Cash Flow Overview, 2005. Disponível em: <http://pt.scribd.com/doc/7239393/Discounted-Cash-Flow>. Acesso em: 12 dez. 2014.

STIGLITZ, J. E. Principles of macroeconomics. Stanford University/W.W. Norton & Company, 1993.

TRIGEORGIS, L. Real Options: Managerial Flexibility and Strategy in Resource Allocation. U.S., 1996.

Downloads

Published

2017-08-28

How to Cite

Montini, M. J., & Dos Santos, J. O. (2017). Use of roadmaps of evaluation to diagnose the financial viability of long-term investment alternatives. Contextus - Contemporary Journal of Economics and Management, 15(1), 34–61. https://doi.org/10.19094/contextus.v15i1.875

Issue

Vol. 15 No. 1: jan/abr 2017

Section

Articles

License

 

The authors, while doing the submission, accept the notice below:

We authors hold the copyright related to our paper and transfer Contextus journal the right for the first publication with a Creative Commons’ international license of the modality Attribution – Non-commercial 4.0, which in turn allows the paper to be shared providing that both the authorship and the journal’s right for initial release are acknowledged.

Furthermore, we are aware of our permission to take part in additional contracts independently for non-exclusive distribution of the version of our work published in this journal (e.g. publishing it in an institutional repository or as a book chapter), while acknowledging both the authorship and the journal’s initial publication.

We also certify that the paper is original and up to this date has not been released in any other journal, Brazilian or of another nationality, either in Portuguese or another language, as well as it has not been sent for simultaneous publication in other journals.

Last, we not only know that plagiarism is not tolerated by Contextus but also certify the paper presents the sources of passages from cited works, including those authored by ourselves.