Cash-Flow-at-Risk (CFaR) Model—A Useful Tool for Risk Management in Corporates
Concept
Long-term financial modeling is one of the key challenges for the corporate finance function in any company. The future is embedded with a host of uncertainties. Financial performance is contingent upon a host of externalities which are beyond your control, be it at the macro levels (exchange rates, crude prices, interest rates, and tax rates inflation) or revenue/cost drivers internal to the company (asset-liability management, wage hikes, attrition, productivity, equipment utilization, market share, etc.). In such a scenario it becomes imperative to understand whether there are more scientific ways to forecast such risks and their likely impact ...
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