Factors of efficiency of investments
Since investment is an investment of capital for profit, its efficiency is based on profitability and capitalization.
There are several investment indicators:
the net value of the current project, which immediately after the transaction shows its effectiveness;
internal rate of return, which allows you to evaluate both investments in the project and the maximum costs;
an investment profitability index that shows the actual return on invested capital.
When making calculations, you should know that these indicators are both absolute and relative, as well as time-dependent.Factors of investment
The social or economic result obtained shows how effective the investments were as a result. In foreign practice, the criterion of economic efficiency of investments is the rate of net profit. At the same time, the factors of investment efficiency should be divided into two groups:
Positive (positive effect on investment efficiency),
Negative (negatively affecting the efficiency of investments).
The most important factor is security, so more money is usually invested in more reliable projects. However, there are more profitable projects, but more risky. Therefore, it is necessary to calculate the risks if it is possible to make a more profitable investment.
The most common methods of calculating risks are:
statistical method, in which on the basis of statistical data and calculations of deviations from the average are determined by the degree of risk;
expert, which provides for a survey of specialists on analogous enterprises, and on the basis of the survey data determine the degree of risk of investments.
With direct investment, that is, when work is carried out on one project, the degree of risk is quite high. So-called portfolio investments are used to significantly reduce risks. They involve participation in several projects with varying degrees of profitability and risk. At the same time, possible losses of riskier investments are compensated by lower relative returns, but more reliable revenues from less risky investments.
If we talk about the investment of temporarily free funds, then with a well-organized financial market, investment activity is growing due to a more reliable forecast of the success of existing projects, which makes it possible to obtain sufficient returns on invested funds.