Reinvestment Possibilities and Evaluation: A Literature ReviewProceeding: 7th International Conference Innovation Management, Entrepreneurship and Sustainability (IMES 2019) (IMES)
Publication Date: 2019-05-30
Authors : Pavla Pokorná Jarmila Šebestová;
Page : 746-759
Keywords : Business policy; company; equity financing; reinvestment; company segmentation;
The topic of the research was selected in view of the prosperity and growth of firms andthe lack of information in the policy of reinvestment companies in general. The question arises if thissituation also affects the company's profit-sharing policy in some way. Design/methodology/approach: The first step is to map possible ways how reinvestment is definedand calculated in the current literature. A bibliometric analysis on existed studies was made to findout a logical pathway to describe determinants, closely connected with reinvestments. A sum of 3,635records in total was obtained from Web of Science database, to be compared. Secondly, articles withfinancial ratios had been reviewed and compared to choose appropriate set of indicators. Findings: Six key ratios were identified within first phase to be able to frame a further researchactivity by Modified IRR, Average IRR, Economic value added, Discounted economic value-added,Modified NPV and Annualised Net Present Value. A bibliometric analysis had shown three keyproblems such as (a) no ties between different financial indicators (internal ratios and ratios based onstock market); (b) lack of financial planning and the connection with equity financing; (c) no tiebetween financing ang equity financing for innovation, no other areas of reinvestment possibilitiesare discussed in review articles. Research/practical implications: A reinvestment as a term relates to financial controlling inEuropean countries and it relates to profitability and liquidity ratios. Further primary research mustfocus on dynamic investment ratios evaluation, connected with determinants which were identified.These results can be a source for financial strategy directions for company development. Originality/value: A wide bibliometric analysis (3,635 sources), which confirm non-unifiedapproach for reinvestment definition and ratios for reinvestment evaluation. This topic can serve asstart point to uncover the current trend of money flows and possible strategy in enterprises with properindicators.
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