Financial analysis inspired by the 5P approach of Sustainable Development applied to the Dow Jones index
Keywords:
financial analysis, sustainable development
Abstract
In this document, the research problem of proposing a methodology to apply financial analysis under the 5P approach of Sustainable Development: People, Prosperity, Peace, Planet, and Partnerships was addressed. To do this, the financial information of companies that make up the Dow Jones Index was used to design indicators that plausibly refer to sustainable development. The methodology used in this research was quantitative, documentary, and descriptive. Financial indicators that are relevant to the sustainable development of entities were strategically selected and their results were quantitatively analyzed, normalized in order to propose a methodology to identify, through financial ratios, the degree of sustainable development in important companies of the Dow Jones Index. This document aims to motivate the replication of this type of financial analysis to deepen the financial analysis inspired by the sustainable development approach, as part of the fundamental analysis applied to companies listed on stock exchanges.
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References
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Van Zanten, J. A., & Van Tulder, R. (2021). Improving companies' impacts on sustainable development: A nexus approach to the SDGS. Business Strategy and the Environment, 30(8), 3703-3720. https://doi.org/10.1002/bse.2835
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Buele, I., Tigsi, A., & Solano, S. (2021). Financial analysis and forecasting of business failure applied to manufacturing companies. Academy of Accounting and Financial studies journal, 25(2), 1-11. https://www.proquest.com/openview/dfcda3ece45f335eedaf97b2f14b07a1/1?pq-origsite=gscholar&cbl=29414
Choiriyah, C., Fatimah, F., Agustina, S., & Ulfa, U. (2020). The effect of return on assets, return on equity, net profit margin, earning per share, and operating profit margin on stock prices of banking companies in Indonesia Stock Exchange. International Journal of Finance Research, 1(2), 103-123. DOI: https://doi.org/10.47747/ijfr.v1i2.280
Clarke, A., & MacDonald, A. (2019). Outcomes to partners in multi-stakeholder cross-sector partnerships: A resource-based view. Business & Society, 58(2), 298-332. https://doi.org/10.1177/0007650316660534
Devine, A., & Yönder, E. (2023). Impact of environmental investments on corporate financial performance: Decomposing valuation and cash flow effects. The Journal of Real Estate Finance and Economics, 66(4), 778-805. https://doi.org/10.1007/s11146-021-09872-y
Dunakhir, S. (2023). Cash Flow Statements and Its Impact On Firms Valur. PINISI Business Administration Review, 5(1), 1-8. URL: https://ojs.unm.ac.id/PBAR/article/view/44319
Franceschelli, M., Santoro, G., & Candelo, E. (2018). Business model innovation for sustainability: a food start-up case study. British Food Journal, 120(10), 2483-2494. https://www.emerald.com/insight/content/doi/10.1108/BFJ-01-2018-0049/full/html
Frost, G., & Rooney, J. (2021). Considerations of sustainability in capital budgeting decision-making. Journal of Cleaner Production, 312, 127650. https://doi.org/10.1016/j.jclepro.2021.127650
Gómez, J., Granadillo, E., & Herrera, T. (2018). Método de cálculo multivariante para analizar y proyectar el comportamiento de las razones financieras de grupos empresariales del sector extracción en Colombia. Interciencia, 43(10), 696-700. https://www.redalyc.org/journal/339/33957861004/33957861004.pdf
Haralayya, B. (2021). Financial Statement Analysis of Shri Ram City Union Finance. Iconic Research And Engineering Journals, 4(12), 183-196. https://www.researchgate.net/profile/Dr-Haralayya/publication/352819456_Financial_Statement_Analysis_of_Shri_Ram_City_Union_Finance/links/60db194a299bf1ea9ecc9151/Financial-Statement-Analysis-of-Shri-Ram-City-Union-Finance.pdf
He, X., Lin, M., Chen, T. L., Lue, B., Tseng, P. C., Cao, W., & Chiang, P. C. (2020). Implementation plan for low-carbon resilient city towards sustainable development goals: Challenges and perspectives. Aerosol and Air Quality Research, 20(3), 444-464. https://doi.org/10.4209/aaqr.2019.11.0568
Hope, K. (2020). Peace, justice and inclusive institutions: overcoming challenges to the implementation of Sustainable Development Goal 16. Global Change, Peace & Security, 32(1), 57-77.https://doi.org/10.1080/14781158.2019.1667320
Ibarra, S., De la Vega, J.G., & Malcón, C. (2023). La Aplicación de la Contabilidad Ambiental para el Logro de los Objetivos de Desarrollo Sostenible. Revista de investigación en ciencias contables y administrativas, 8(1), 91-104. https://ricca.umich.mx/index.php/ricca/article/view/95
Istiak, K., & Serletis, A. (2020). Risk, uncertainty, and leverage. Economic Modelling, 91, 257-273. https://doi.org/10.1016/j.econmod.2020.06.010
Jackson, C., & Orr, A. (2021). The embeddedness of sustainability in real estate investment decision-making. Journal of European Real Estate Research, 14(3), 362-380. https://www.emerald.com/insight/content/doi/10.1108/JERER-09-2020-0050/full/html
Jiménez, K., Quizhpilema, E., & Quezada, J. (2024). Influencia de la auditoría externa en las razones financieras: un análisis para las PYMES manufactureras cuencanas. Bolentín de Coyuntura, (40), 07-14. https://revistas.uta.edu.ec/erevista/index.php/bcoyu/article/view/2255
Kadim, A., Sunardi, N., & Husain, T. (2020). The modeling firm's value based on financial ratios, intellectual capital and dividend policy. Accounting, 6(5), 859-870. DOI: 10.5267/j.ac.2020.5.008
King, T., Loncan, T., & Khan, Z. (2021). Investment, leverage and political risk: Evidence from project-level FDI. Journal of Corporate Finance, 67, 101873. https://doi.org/10.1016/j.jcorpfin.2020.101873
Koengkan, M. (2022). Capital stock development in Latin America and the Caribbean region and their effect on investment expansion in renewable energy. Journal of Sustainable Finance & Investment, 12(2), 612-629. https://doi.org/10.1080/20430795.2020.1796100
Martynova, N., Ratnovski, L., & Vlahu, R. (2020). Bank profitability, leverage constraints, and risk-taking. Journal of Financial Intermediation, 44, 100821. https://doi.org/10.1016/j.jfi.2019.03.006
Mbah, R., & Wasum, D. (2022). Russian-Ukraine 2022 War: A review of the economic impact of Russian-Ukraine crisis on the USA, UK, Canada, and Europe. Advances in Social Sciences Research Journal, 9(3), 144-153. DOI:10.14738/assrj.93.12005
Miar, M., Rizani, A., Pardede, R., & Basrowi, B. (2024). Analysis of the effects of capital expenditure and supply chain on economic growth and their implications on the community welfare of districts and cities in central Kalimantan province. Uncertain Supply Chain Management, 12(1), 489-504. DOI: 10.5267/j.uscm.2023.9.003
Organization for Economic Cooperation and Development (2019). Measuring Distance to the SDG Targets 2019: An Assessment of Where OECD Countries Stand. OECD Publishing, Paris, https://doi.org/10.1787/a8caf3fa-en.
Organization for Economic Cooperation and Development (2022). The Short and Winding Road to 2030: Measuring Distance to the SDG Targets. OECD Publishing. Paris, https://doi.org/10.1787/af4b630d-en.
Rahman, M. M., Saima, F. N., & Jahan, K. (2020). The impact of financial leverage on firm's profitability: an empirical evidence from listed textile firms of Bangladesh. Asian Journal of Business Environment, 10(2), 23-31. https://doi.org/10.13106/JBEES.2020.VOL10.NO2.23
Rahmawati, R., & Narsa, I. M. (2020). Operating cash flow, profitability, liquidity, leverage and dividend policy. International Journal of Innovation, Creativity and Change, 11(9), 121-148. http://repository.unair.ac.id/id/eprint/119498
Refinitiv Eikon (2024). [Financials]. Financials [Data set]. Recuperado en enero 30, 2024 de: https://eikon.thomsonreuters.com/index.html
Rodríguez, N., & López, J. (2020). The usefulness of operating cash flow for predicting business bankruptcy in medium-sized firms. Revista Brasileira de Gestão de Negócios, 22, 917-931. https://www.scielo.br/j/rbgn/a/SLnHQymhkFt6tJ5QK9GZVXf/?lang=en
Van der Waal, J. W., & Thijssens, T. (2020). Corporate involvement in sustainable development goals: Exploring the territory. Journal of Cleaner Production, 252, 119625. https://doi.org/10.1016/j.jclepro.2019.119625
Van Zanten, J. A., & Van Tulder, R. (2021). Improving companies' impacts on sustainable development: A nexus approach to the SDGS. Business Strategy and the Environment, 30(8), 3703-3720. https://doi.org/10.1002/bse.2835
Zhongping, S., Yongjun, G., Yunbao, X., Qifeng, X., & Andlib, Z. (2023). Green financial investment and its influence on economic and environmental sustainability: does privatization matter?.Environmental Science and Pollution Research, 30(39), 91046-91059. https://link.springer.com/article/10.1007/s11356-023-28520-x
Published
2024-08-01
How to Cite
Vega Meneses, J. G. (2024). Financial analysis inspired by the 5P approach of Sustainable Development applied to the Dow Jones index. GPH-International Journal of Business Management, 7(06), 200-214. https://doi.org/10.5281/zenodo.13149552
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Articles
Copyright (c) 2024 José Gerardo De La Vega Meneses
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