Budgeting models and system simulation: a dynamic approach

The main aim of this research is to introduce a new series of quantitative instruments to integrate the set of information at the disposal of companies, obtained, to begin with, from its accounting records. Starting from the balance sheet, known to be the most important source of information for a company, both at the internal and external level, we will show an initial quantitative model which uses accounting data to represent the dynamics of the company and to create a simulation associated with those dynamics. Specifically, this application is based on the idea of representing the dynamics of a balance sheet via a series of difference equations, with the a priori assumption that accounting procedures can be mathematically axiomatized. This new application is the result of lengthy research begun in 2008 at Verona University, and can be considered as a synthesis and continuation of numerous results published in company literature over the past forty years.