An Innovative Method for Deterministic Multifactor Analysis Based on Chain Substitution Averaging

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Figure 3: Authors should check the color legend. There seems to be no legend for color red

 

Page 2 Line 61: Authors should correct the typographical error “Adamov []4”

Authors should move the part of Table 1 from Page 2 to 3. Generally, authors should check their citations. 

 

The motivation of the study has not been clearly defined. Authors are advised to make clarity the motivation and also stating the objective of the research

 

Authors are advised to structure their manuscript for coherence. There are a lot of sections which can be reduced. Some sections can be a subsection of main sections to help clarity and easy flow of the reading.

Comments on the Quality of English Language

Authors should improve on the English Language

Author Response

First of all, I would like to thank you for your thorough review of our paper (mathematics-3053821) and helpful comments to improve it.

 

Reviewer 1

Comments and Suggestions for Authors

 

Comments 1: “Figure 3: Authors should check the color legend. There seems to be no legend for color red.”

Response 1: Correction done. The legends of Figures 2 and 3 have been corrected.

 

Comments 2: “Page 2 Line 61: Authors should correct the typographical error “Adamov []4”

Authors should move the part of Table 1 from Page 2 to 3. Generally, authors should check their citations.”

Response 2: The corrections have been made. Citations have been verified.

 

Comments 3: “The motivation of the study has not been clearly defined. Authors are advised to make clarity the motivation and also stating the objective of the research.”

Response 3: To clarify the motivation of the study, the purpose of the study has been changed to: “The aims of this paper are to present the methodology, the derived mathematical expressions for determining the individual factor influences and the adaptation for the conditions of dynamic deterministic factor analysis and the results of the application of the developed new method for deterministic factor analysis, called the averaged chain substitution method.”

The above text is replaced at the beginning of the abstract and at the end of section 1. Introduction.

 

Comment 4: „Authors are advised to structure their manuscript for coherence. There are a lot of sections which can be reduced. Some sections can be a subsection of main sections to help clarity and easy flow of the reading.”

Response 4: We discussed the possibilities of restructuring the text, but we were convinced that the current structure clearly corresponds to the set aims of the study.

 

Comment 5: “Authors should improve on the English Language.”

Response 5: The text has been checked and the English has been improved.

 

Thank you very much for your remarks and comments. They were very useful for me to emphasize the main tasks and contributions of the manuscript, and also to focus the attention of the readers on the new and unique elements.

Reviewer 2 Report

Comments and Suggestions for Authors

[Mathematics] Manuscript ID: mathematics-3053821-peer-review-v1

Article:

 

 

 An Innovative Method for Deterministic Multifactor Analysis Based on Chain Substitution Averaging

 

Review Comments

1.    Lines 58-65. Review of previous research, including: Jugenburg [1]; humane [2]; Sheremet, Djej and Shapovalov [3]; Adamov [4]; Fedorova and Egorov [5]; Lipovetsky S.S.[6]; Vaninsky A.Y. [7]; Ross, Westerfield and Jaffe [8]; Upbringing [9]; Bernstein, Wild, Subramanyam [10]; Bakanov and Sheremet [11]; Chebotarev [12]; Emery, Finnerty and Stowe [13]; Kremer [14]; Bernstein, Myers and Allen [15]; Lyubushin [16]; Lebedev [17]; Prokofiev, Nosov and Salomatina [18]; Savitskaya [19] and Mitev [20–24]. Please explain briefly and clearly what they each did, what the results were and the findings. Don't just mention names. This is so that readers can understand that there are gaps in previous research, so they need to be developed by the authors in this paper (research).

2.    In Table 1, in the Integral method row, Mixed column, it says "Only when P=a/(b+c+...)", and in the Logarithmic method row, it says "Only when P=(a*b* ... )/(c*d* ...)". When does each "..." end? Please provide an explanation (perhaps below the table).

3.    Lines 212-214. What about P₂, P₃, and so on up to P_n?

4.    Lines 225-227. What about P₂, P₃, and so on up to P_n?

5.    Lines 259-261. What about P₂, P₃, and so on up to P_n?

6.    Lines 271-273. What about P₂, P₃, and so on up to P_n?

7.    Line 500. It is necessary to add a discussion, which provides recommendations for financial practitioners (companies and/or investors), in practical use of the results of methods/models development research carried out by authors. This is so that financial practitioners can understand and implement it.

 

Comments for author File: Comments.pdf

Author Response

First of all, I would like to thank you for your thorough review of our paper (mathematics-3053821) and helpful comments to improve it.

Reviewer 2

Comments and Suggestions for Authors

 

Comments 1: Lines 58-65. Review of previous research, including: Jugenburg [1]; humane [2]; Sheremet, Djej and Shapovalov [3]; Adamov [4]; Fedorova and Egorov [5]; Lipovetsky S.S.[6]; Vaninsky A.Y. [7]; Ross, Westerfield and Jaffe [8]; Upbringing [9]; Bernstein, Wild, Subramanyam [10]; Bakanov and Sheremet [11]; Chebotarev [12]; Emery, Finnerty and Stowe [13]; Kremer [14]; Bernstein, Myers and Allen [15]; Lyubushin [16]; Lebedev [17]; Prokofiev, Nosov and Salomatina [18]; Savitskaya [19] and Mitev [20–24]. Please explain briefly and clearly what they each did, what the results were and the findings. Don't just mention names. This is so that readers can understand that there are gaps in previous research, so they need to be developed by the authors in this paper (research).

Response 1: Thank you very much for the suggestion. A correction has been made to the paper as follows:

Jugenburg theoretically substantiates and derives the third variant of the method of simple addition of an “indecomposable remainder”. A. Humal, V. Fedorova and Yu. Egorov give a detailed description of the logarithmic method for DFA. A.D. Sheremet, G.G. Day and V.N. Shapovalov theoretically substantiate the integral method for DFA in 1971. V.E. Adamov derives and defends the first and second variants of the method of simple addition of an “indecomposable remainder” in 1977. S.S. Lipovetsky proposes an approach for the distribution of the growth of the resultative indicator by factor variables through the variation analysis, which is not widely used. A.Z. Vaninsky further developed the integral method for a wider range of factorial models. M.I. Bakanov and A.D. Sheremed in 2001 derived more working formulas for determining individual factor influences by the integral method. N.Sh. Kremer, K.N. Lebedev, V.A. Prokofiev, V.V. Nosov, and T.V. Salomatina summarize the shortcomings of DFA methods developed up to five years ago.

1. Foster, L.A. Bernstein, J.J. Wilde, K.R. Subramanyam give the practical application of DFA methods to the conditions of Financial Statement Analysis in the Western literature. SA Ross, RW Westerfield, J. F. Jaffe, DR Emery, J. D. Finnerty, J. D. Stowe apply DFA methods in corporate financial management.

 

Comments 2. “In Table 1, in the Integral method row, Mixed column, it says "Only when P=a/(b+c+...)", and in the Logarithmic method row, it says "Only when P=(a*b* ... )/(c*d* ...)". When does each "..." end? Please provide an explanation (perhaps below the table).”

Response 2: Table 1 adjusts to how many factor variables the method was developed. In the first case, additive-multiple factor models with an additive part in the denominator. In the second case, multiplicative-multiple factor models with a multiplicative part in the numerator and denominator.

 

Comments 3. Lines 212-214. What about P₂, P₃, and so on up to P_n?

Comments 4. Lines 225-227. What about P₂, P₃, and so on up to P_n?

Comments 5. Lines 259-261. What about P₂, P₃, and so on up to P_n?

Comments 6. Lines 271-273. What about P₂, P₃, and so on up to P_n?

Response 3,4,5,6: In the static deterministic factor analysis, the methods are used for two moments base (T₀) reported (T₁), i.e. one period with start (0) and end (1). Later in the article, more periods are already manifested in the dynamic DFA, as the analysed period is divided into sub-periods.

Therefore, comments 3 to 6 remain uncorrected in the article.

 

Comments 7. “Line 500. It is necessary to add a discussion, which provides recommendations for financial practitioners (companies and/or investors), in practical use of the results of methods/models development research carried out by authors. This is so that financial practitioners can understand and implement it.”

Response 7: The reviewer's comment is valid and therefore section 7. Discussion has been added, which contains the following text:

„Dynamic deterministic factor analysis using the averaged chain substitution method enables fast, easy and accurate quantification of individual factor influences in a deter-ministic factor model. Through it, the trends in the development of resultative indicators and the quantitative influences of the participating factors on the quantitative change of the resultative indicator can be revealed.

The averaged chain substitution method is applicable to perform dynamic determin-istic factor analyses of deterministic factor models of resultative indicators from all scien-tific fields where there are mathematically determined factorial dependencies between the resultative indicator and the participating factor variables.

The results of the dynamic deterministic factor analysis serve to quantify the cause-and-effect relationships, formulating reasonable conclusions and guidelines for improving the future economic activity of the enterprise by financial analysts.“

 

Thank you very much for your remarks and comments. They were very useful for me to emphasize the main tasks and contributions of the manuscript, and also to focus the attention of the readers on the new and unique elements.

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

[Mathematics] Manuscript ID: mathematics-3053821-peer-review-v2

Article:

 

 An Innovative Method for Deterministic Multifactor Analysis Based on Chain Substitution Averaging

 

Review Comments

1.     Lines 225-227. What about P₂, P₃, and so on up to P_n?

2.     Lines 238-240. What about P₂, P₃, and so on up to P_n?

3.     Lines 272-274. What about P₂, P₃, and so on up to P_n?

4.     Lines 284-286. What about P₂, P₃, and so on up to P_n?

Review Comments No. 1, 2, 3 and 4, are comments and suggestions in review round 1, which have not been responded to. At the very least, please explain: why only explain up to P₁.

 

Lines 515-527. In the "7. Discussion" section, the explanation content is very minimal. It would be better if it were explained in more detail, including comparisons with the results of previous research. This is so that financial practitioners can understand and implement it.

Comments for author File: Comments.pdf

Author Response

First of all, I would like to thank you for your thorough review of our paper (mathematics-3053821) and helpful comments to improve it.

Reviewer 2

Comments and Suggestions for Authors

 

Comments 1. Lines 225-227. What about P2, P3, and so on up to Pn?

Comments 2. Lines 238-240. What about P2, P3, and so on up to Pn?

Comments 3. Lines 272-274. What about P2, P3, and so on up to Pn

Comments 4. Lines 284-286. What about P2, P3, and so on up to Pn?

Review Comments No. 1, 2, 3 and 4, are comments and suggestions in review round 1, which have not been responded to. At the very least, please explain: why only explain up to P1. 

Response 1,2,3,4: In the static deterministic factor analysis, the methods are used for two moments base (T₀) reported (T₁), i.e. one period with start (0) and end (1). Later in the article, more periods are already manifested in the dynamic DFA, as the analysed period is divided into sub-periods. In this sense, there has clearly been some confusion, because we do not use the ones you quoted P2, P3, and so on up to Pn (as you can see using the search function in the file).

Comments 5. “Lines 515-527. In the "7. Discussion" section, the explanation content is very minimal. It would be better if it were explained in more detail, including comparisons with the results of previous research. This is so that financial practitioners can understand and implement it.”

Response 5: Thank you very much for the suggestion. The discussion section has been expanded and redesigned.

 

Thank you very much for your remarks and comments. They were very useful for me to emphasize the main tasks and contributions of the manuscript, and also to focus the attention of the readers on the new and unique elements.

Round 3

Reviewer 2 Report

Comments and Suggestions for Authors It has been sufficiently revised according to comments and suggestions from the review results.