Study of assessing the effectiveness of a company’s financial strategy based on value orientation

Abstract

The article examines the assessment of the effectiveness of the financial strategy of industrial enterprises under conditions of heightened macroeconomic uncertainty and rising capital costs, when accounting profitability indicators lose their explanatory power for market dynamics of value. Using a dataset of 85 large companies in the machinery and metalworking industries for 2019–2023, a value-oriented analytical framework is proposed that combines the calculation of the weighted average cost of capital and indicators of economic and market value added, with mandatory adjustments of accounting figures to eliminate the effects of reporting standards and inflationary distortions. It is shown that tightening monetary conditions leads to a jump in the hurdle rate of return: an increase in WACC during the peak period shifts projects with previously acceptable planned profitability into a zone of negative economic efficiency and provokes a divergence between the growth of operating profit and actual value creation. Using the example of an averaged company profile, the inertia of invested capital is revealed: with an increase in NOPAT and a moderate growth of ROIC, economic value added in the crisis year becomes negative due to the outpacing growth of financing costs, while the subsequent recovery remains fragile because of a minimal positive return spread. A high sensitivity of market valuations to the dynamics of economic profit is traced: a decline in MVA and the market-to-book ratio in an unfavorable period turns out to be disproportionate to changes in operating metrics, which is interpreted through the expectations mechanism and the multiplicative horizon effect. Decomposition of ROIC shows that improvement is achieved mainly through margins, while deterioration in capital turnover signals the freezing of resources in assets and a decline in the marginal productivity of capital. The materials of the article make it possible to use the presented toolkit to diagnose a company’s transition to a value destruction regime and to compare internal efficiency drivers with market reactions under various interest rate and exchange rate fluctuation scenarios.