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Finance and Credit
 

Modeling the aggregate risk of common stockholder through the determined financial model

Vol. 27, Iss. 9, SEPTEMBER 2021

Received: 10 June 2021

Received in revised form: 24 June 2021

Accepted: 8 July 2021

Available online: 30 September 2021

Subject Heading: Banking

JEL Classification: D24, D71, D92, G3, G32

Pages: 1934–1961

https://doi.org/10.24891/fc.27.9.1934

Nadezhda V. USHAKOVA Tula State University (TulSU), Tula, Russian Federation
n_ush@list.ru

ORCID id: not available

Anna L. SABININA Tula State University (TulSU), Tula, Russian Federation
sabinina.anna@yandex.ru

ORCID id: not available

Aleksandr S. VASIN Federal Treasury, Moscow, Russian Federation
fim306@mail.ru

ORCID id: not available

Sergei I. GAIDARZHI Tula State University (TulSU), Tula, Russian Federation
fim306@mail.ru

ORCID id: not available

Subject. The article focuses on methods for modeling and quantifying the risk associated with common stockholders.
Objectives. We perform a critical analysis and study how the existing risk assessment methods can be modified. The article demonstrates strengths and advantages of the determined financial model.
Methods. The study is based on methods of the discourse analysis, mathematical statistics, financial modeling.
Results. If the entity receives payments out of net profit, we show the modified formula for assessing the aggregate leverage and suggest using the term financial leverage in Russian. The chi-squared comparison method reveals the need to respect aggregate leverage restrictions. We also present formulae for assessing its minimum and maximum. In this study, we provide a broader view of the financial mentality as a concept, quantify to what extent the decision-maker is prone to risk.
Conclusions and Relevance. The advisable aggregate leverage fits in the interval, which should be specifically assessed for each entity, and can be determined by official reporting data through the proposed formulae. Managing common stockholders’ risk pursues to maintain the aggregate leverage ratio within its maximum and minimum. This task can be solved by modifying the structure and ratio of fixed and variable costs.

Keywords: operating leverage, financial leverage, risk management, modeling

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