Modeling Performance of Financial System Using System Dynamics Approach: A Case Study on a Sand and Gravel Firm

• Main Authors: Alinaghi Mosleh Shirazi, Bahareh Maleki, Mojtaba Khalifeh, Amir Ramezani Moghadam
• Format: Article
• Language: fas
• Published: University of Isfahan 2018-04-01
• Series: Journal of Asset Management and Financing
• Subjects: system dynamics; cash flow; net working capital; net present value
• Online Access: https://amf.ui.ac.ir/article_21331_ee20d012bc70faf09e52eb96bced5e8a.pdf
• ISSN: 2383-1189; 2383-1189

Financial performance measurement has been known as an important tool for assessing and guiding strategies, projects, and strategic decisions of organizations. Since assessment of financial performance is multidimensional, dynamic, and time-dependent, system dynamics approach is used in this study. Considering a 15-year horizon, this study, using this approach and application Vensim DSS software models and simulates the performance of the financial system of a sand and gravel firm (private joint stock company) which is going to increase its productive capacity. The main purpose of this study is to assess and analyze the investment project for increasing productive capacity and its cost effectiveness. On the other hand, receivable and payable accounts are analyzed and assessed to improve the performance of the financial system. The results suggest that increasing the productive capacity is affordable project. Further, aggressive and moderate scenarios for management of receivable and payable accounts in current situation and conservative and moderate scenarios in increasing productive capacity situation lead to an increase in the financial system variables. Financial experts can use this model as a tool for supporting the company’s development programs and for managing the performance of its financial system.