Net present value forecast for life-time value financial processing in a relational database management system
View Patent ↗A Life-Time Value (LTV) system is a data-driven computer-facilitated financial model that provides accurate and consistent profitability projections using current period account level profitability data stored in a Relational Database Management System (RDBMS). The Life-Time Value system performs Net Present Value (NPV) and Future Value (FV) processing using business-rule and data-driven applications that embrace the current period profit components, defines forecast periods, parameters and methodologies, and applies appropriate growth values, attrition values and propensity values to an object of future value interest.
1. A method of performing financial processing, comprising:
(a) selecting, in one or more computers, accounts, amounts and rates from account data stored in a database using selection criteria specified by one or more rules; and
(b) performing, in the one or more computers, one or more Net Present Value (NPV) calculations on the selected accounts according to NPV forecast and attrition rules using the selected amounts and rates, wherein the NPV calculations determine a net present value of an expected profitability value of the selected accounts;
(c) wherein the NPV calculations include performing NPV forecast calculations by applying the NPV forecast rules to the selected accounts using the selected amounts and rates, performing NPV attrition calculations by applying the NPV attrition rules to results of the NPV forecast calculations, and determining the net present value of the selected accounts from results of the NPV attrition calculations;
(d) wherein applying the NPV forecast rules comprises matching the NPV forecast rule against the selected accounts, obtaining an amount to be forecast from the matched accounts using forecast amount selection criteria specified in the NPV forecast rule, obtaining account level information needed from the matched account data, obtaining an Assumed Cash Flow for the matched accounts, obtaining a Contractual Cash Flow from matched accounts, mapping remaining terms of the matched accounts to forecast periods, calculating amounts for each forecast period using the NPV forecast rule, and storing the amounts in the database; and
(e) wherein the NPV forecast rule is selected from a plurality of methods comprising Constant (no compounding), Constant (with compounding), Additive (no compounding), Additive (with compounding), Manual (no compounding), Manual (with compounding), Declining balance, Interest—Unpaid Principal, Interest—Paid Principal, and Constant methods.
2. The method of claim 1 , wherein the NPV is a net present profitability value.
3. The method of claim 1 , wherein the selected accounts contain current profitability values.
4. The method of claim 3 , wherein the current profitability values are aggregated to provide an initial amount for the NPV calculations.
5. The method of claim 1 , wherein the selected amounts are forecast amounts.
6. The method of claim 1 , wherein the selected rates are NPV forecast rates.
7. The method of claim 1 , wherein a user specifies one or more forecast periods over which the NPV calculations are performed.
8. The method of claim 7 , wherein a user specifies one or more rates for the forecast periods.
9. The method of claim 1 , wherein the NPV forecast rule comprises a Constant (no compounding) method according to:
Amount i =Amount 0 *(1+ R 0 )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
10. The method of claim 1 , wherein the NPV forecast rule comprises a Constant (with compounding) method according to:
Amount i =Amount 0 *(1+ R m ) i *(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R m =monthly rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
11. The method of claim 1 , wherein the NPV forecast rule comprises an Additive (no compounding) method according to:
Amount i =Amount 0 *(1+ i *( R 0 /12))*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
12. The method of claim 1 , wherein the NPV forecast rule comprises an Additive (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
13. The method of claim 1 , wherein the NPV forecast rule comprises a Manual (no compounding) method according to:
Amount i =Amount 0 *(1+ R man )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R man =manual rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
14. The method of claim 1 , wherein the NPV forecast rule comprises a Manual (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
15. The method of claim 1 , wherein the NPV forecast rule comprises a Declining balance method according to:
Amount
i
=
(
k
-
j
+
1
)
*
Amount
0
-
Amount
0
n
*
(
k
-
j
+
1
)
*
(
k
+
j
)
2
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
n=amortization term.
16. The method of claim 1 , wherein the NPV forecast rule comprises an Interest—Unpaid Principal method according to:
Amount
i
=
Amount
0
*
(
k
-
j
+
1
)
-
Amount
0
(
1
+
r
)
n
-
1
*
[
(
1
+
r
)
j
-
(
1
+
r
)
k
+
1
-
r
-
(
k
-
j
+
1
)
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period,
n=amortization term, and
r=amortization rate.
17. The method of claim 1 , wherein the NPV forecast rule comprises an Interest—Paid Principal method according to:
Amount
i
=
Amount
0
*
[
(
1
+
r
)
k
+
1
-
(
1
+
r
)
j
r
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
r=amortization rate.
18. The method of claim 1 , wherein the NPV forecast rule comprises a Constant method according to:
Amount i =Amount 0
where:
Amount i =calculated amount by forecast period, and
Amount 0 =initial amount.
19. A system for performing financial processing, comprising:
one or more computers;
logic, performed by the one or more computers, for:
(a) selecting accounts, amounts and rates from account data stored in a database using selection criteria specified by one or more rules; and
(b) performing one or more Net Present Value (NPV) calculations on the selected accounts according to NPV forecast and attrition rules using the selected amounts and rates, wherein the NPV calculations determine a net present value of an expected profitability value of the selected accounts;
(c) wherein the NPV calculations include performing NPV forecast calculations by applying the NPV forecast rules to the selected accounts using the selected amounts and rates, performing NPV attrition calculations by applying the NPV attrition rules to results of the NPV forecast calculations, and determining the net present value of the selected accounts from results of the NPV attrition calculations;
(d) wherein applying the NPV forecast rules comprises matching the NPV forecast rule against the selected accounts, obtaining an amount to be forecast from the matched accounts using forecast amount selection criteria specified in the NPV forecast rule, obtaining account level information needed from the matched account data, obtaining an Assumed Cash Flow for the matched accounts, obtaining a Contractual Cash Flow from matched accounts, mapping remaining terms of the matched accounts to forecast periods, calculating amounts for each forecast period using the NPV forecast rule, and storing the amounts in the database; and
(e) wherein the NPV forecast rule is selected from a plurality of methods comprising Constant (no compounding), Constant (with compounding), Additive (no compounding), Additive (with compounding), Manual (no compounding), Manual (with compounding), Declining balance, Interest—Unpaid Principal, Interest—Paid Principal, and Constant methods.
20. The system of claim 19 , wherein the NPV is a net present profitability value.
21. The system of claim 19 , wherein the selected accounts contain current profitability values.
22. The system of claim 21 , wherein the current profitability values are aggregated to provide an initial amount for the NPV calculations.
23. The system of claim 19 , wherein the selected amounts are forecast amounts.
24. The system of claim 19 , wherein the selected rates are NPV forecast rates.
25. The system of claim 19 , wherein a user specifies one or more forecast periods over which the NPV calculations are performed.
26. The system of claim 25 , wherein a user specifies one or more rates for the forecast periods.
27. The system of claim 19 , wherein the NPV forecast rule comprises a Constant (no compounding) method according to:
Amount i =Amount 0 *(1+ R 0 )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
28. The system of claim 19 , wherein the NPV forecast rule comprises a Constant (with compounding) method according to:
Amount i =Amount 0 *(1+ R m ) i *(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R m =monthly rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
29. The system of claim 19 , wherein the NPV forecast rule comprises an Additive (no compounding) method according to:
Amount i =Amount 0 *(1+ i *( R 0 /12))*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
30. The system of claim 19 , wherein the NPV forecast rule comprises an Additive (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
31. The system of claim 19 , wherein the NPV forecast rule comprises a Manual (no compounding) method according to:
Amount i =Amount 0 *(1+ R man )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R man =manual rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
32. The system of claim 19 , wherein the NPV forecast rule comprises a Manual (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
33. The system of claim 19 , wherein the NPV forecast rule comprises a Declining balance method according to:
Amount
i
=
(
k
-
j
+
1
)
*
Amount
0
-
Amount
0
n
*
(
k
-
j
+
1
)
*
(
k
+
j
)
2
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
n=amortization term.
34. The system of claim 19 , wherein the NPV forecast rule comprises an Interest—Unpaid Principal method according to:
Amount
i
=
Amount
0
*
(
k
-
j
+
1
)
-
Amount
0
(
1
+
r
)
n
-
1
*
[
(
1
+
r
)
j
-
(
1
+
r
)
k
+
1
-
r
-
(
k
-
j
+
1
)
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period,
n=amortization term, and
r=amortization rate.
35. The system of claim 19 , wherein the NPV forecast rule comprises an Interest—Paid Principal method according to:
Amount
i
=
Amount
0
*
[
(
1
+
r
)
k
+
1
-
(
1
+
r
)
j
r
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
r=amortization rate.
36. The system of claim 19 , wherein the NPV forecast rule comprises a Constant method according to:
Amount i =Amount 0
where:
Amount i =calculated amount by forecast period, and
Amount 0 =initial amount.
37. An article of manufacture comprising a storage device embodying instructions that, when read and executed by one or more computers, results in the one or more computers performing a method of financial processing, comprising:
(a) selecting, in one or more computers, accounts, amounts and rates from account data stored in a database using selection criteria specified by one or more rules; and
(b) performing, in the one or more computers, one or more Net Present Value (NPV) calculations on the selected accounts according to NPV forecast and attrition rules using the selected amounts and rates, wherein the NPV calculations determine a net present value of an expected profitability value of the selected accounts;
(c) wherein the NPV calculations include performing NPV forecast calculations by applying the NPV forecast rules to the selected accounts using the selected amounts and rates, performing NPV attrition calculations by applying the NPV attrition rules to results of the NPV forecast calculations, and determining the net present value of the selected accounts from results of the NPV attrition calculations;
(d) wherein applying the NPV forecast rules comprises matching the NPV forecast rule against the selected accounts, obtaining an amount to be forecast from the matched accounts using forecast amount selection criteria specified in the NPV forecast rule, obtaining account level information needed from the matched account data, obtaining an Assumed Cash Flow for the matched accounts, obtaining a Contractual Cash Flow from matched accounts, mapping remaining terms of the matched accounts to forecast periods, calculating amounts for each forecast period using the NPV forecast rule, and storing the amounts in the database; and
(e) wherein the NPV forecast rule is selected from a plurality of methods comprising Constant (no compounding), Constant (with compounding), Additive (no compounding), Additive (with compounding), Manual (no compounding), Manual (with compounding), Declining balance, Interest—Unpaid Principal, Interest—Paid Principal, and Constant methods.
38. The article of claim 37 , wherein the NPV is a net present profitability value.
39. The article of claim 37 , wherein the selected accounts contain current profitability values.
40. The article of claim 39 , wherein the current profitability values are aggregated to provide an initial amount for the NPV calculations.
41. The article of claim 37 , wherein the selected amounts are forecast amounts.
42. The article of claim 37 , wherein the selected rates are NPV forecast rates.
43. The article of claim 37 , wherein a user specifies one or more forecast periods over which the NPV calculations are performed.
44. The article of claim 43 , wherein a user specifies one or more rates for the forecast periods.
45. The article of claim 37 , wherein the NPV forecast rule comprises a Constant (no compounding) method according to:
Amount i =Amount 0 *(1+ R 0 )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
46. The article of claim 37 , wherein the NPV forecast rule comprises a Constant (with compounding) method according to:
Amount i =Amount 0 *(1+ R m ) i *(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R m =monthly rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
47. The article of claim 37 , wherein the NPV forecast rule comprises an Additive (no compounding) method according to:
Amount i =Amount 0 *(1+ i *( R 0 /12))*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R 0 =initial rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
48. The article of claim 37 , wherein the NPV forecast rule comprises an Additive (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
49. The article of claim 37 , wherein the NPV forecast rule comprises a Manual (no compounding) method according to:
Amount i =Amount 0 *(1+ R man )*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
R man =manual rate,
i=forecast period,
j=first month in a forecast period, and
k=last month in a forecast period.
50. The article of claim 37 , wherein the NPV forecast rule comprises a Manual (with compounding) method according to:
Amount i =Amount 0 *(1+Compounded_Rate)*(( k−j+ 1)/12)
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
Compounded_Rate=Rate 1 *Rate 2 * . . . *Rate i .
51. The article of claim 37 , wherein the NPV forecast rule comprises a Declining balance method according to:
Amount
i
=
(
k
-
j
+
1
)
*
Amount
0
-
Amount
0
n
*
(
k
-
j
+
1
)
*
(
k
+
j
)
2
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
n=amortization term.
52. The article of claim 37 , wherein the NPV forecast rule comprises an Interest—Unpaid Principal method according to:
Amount
i
=
Amount
0
*
(
k
-
j
+
1
)
-
Amount
0
(
1
+
r
)
n
-
1
*
[
(
1
+
r
)
j
-
(
1
+
r
)
k
+
1
-
r
-
(
k
-
j
+
1
)
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period,
n=amortization term, and
r=amortization rate.
53. The article of claim 37 , wherein the NPV forecast rule comprises an Interest—Paid Principal method according to:
Amount
i
=
Amount
0
*
[
(
1
+
r
)
k
+
1
-
(
1
+
r
)
j
r
]
where:
Amount i =calculated amount by forecast period,
Amount 0 =initial amount,
i=forecast period,
j=first month in a forecast period,
k=last month in a forecast period, and
r=amortization rate.
54. The article of claim 37 , wherein the NPV forecast rule comprises a Constant method according to:
Amount i =Amount 0
where:
Amount i =calculated amount by forecast period, and
Amount 0 =initial amount.