Real investment: types, forms and valuation. Real investment management

Investments are key at both the micro and macro levels. These funds act as one of the main factors of economic development. Investment flows determine the future of the state, its individual entity, and each enterprise.

Main functions

Investments are the exchange of a certain fair value for a possible uncertain future. In the field of training economists, the study of this phenomenon is one of the most important stages. Considering the role of investment in a broad sense, it should be noted that they provide economic development and financing the country's economic growth. The intensity of these processes to a large extent depends on how quickly financial resources are mobilized to meet the increasing needs of the state itself and the companies operating within it, as well as private individuals. Thus, investment activity and economic growth are interdependent phenomena.

Strategy

One of the key conditions for sustainable economic growth is the activation of the investment policy of the state. This strategy involves a system of measures that determines the structure, volume and direction of capital investments, an increase in fixed assets, as well as their updating in accordance with the latest achievements of technology and science. Investment policy regulates and stimulates the financing process, creates the conditions for sustainable development of the socio-economic sector of the country, region, a certain industry, entrepreneurship in general. The most important areas provided for in the strategy include:

1. Strengthening state support in the development of priority areas of the economy.
2. Formation of the institutional and legal environment conducive to stimulating investment in the real sector.
3. Coordination of the strategy of the regions and the federal center.

Legal aspect

The most important condition for enhancing investment is the improvement of the mechanism of its legal regulation. The main laws in this area are Federal Law No. 39 and Federal Law No. 160. The first one regulates investment activity in the Russian Federation in the form of investments, the second one provides the conditions for the distribution of foreign funds. The legal foundations are also laid down in the Civil Code.

Real investment

These funds are impossible without financial investments. The latter, in turn, receive a logical conclusion in the implementation of the former. Currently, real investments are being made:

1. AT inventories.
2. In fixed assets.
3. Intangible assets.

Classification

Depending on the financing objectives, the following types of real investments are distinguished:

1. Mandatory. These funds are sent at the request of the state. Such investments are necessary for carrying out business activities. This category includes funds for improving the environmental safety of a company, improving working conditions to a specified standard level, and so on.
2. To increase efficiency. Such tools can reduce production costs through the modernization of technologies and equipment, improving the quality of administration and labor. Financing in this direction enhances the competitiveness of the company.
3. In the expansion of production. Such real investments by the enterprise contribute to an increase in output on an existing base.
4. In a new production. Such financing allows you to expand the scope of the company by creating new companies to produce another product or provide other services.

Specificity

Any form of real investment, as a rule, is a long-term large-scale financing. The investment of assets in equipment and land, the construction of new structures or buildings is characterized by a fairly long payback period. But no production will exist without real investment. In order to raise funds, in addition to the company's own proposal, it is necessary to justify their need, to submit technical and economic calculations. The effectiveness of real investments is ensured by constant monitoring of the developed financial project. This process is key to the effectiveness of implementing the company's strategy. During monitoring, an assessment of the effectiveness of real investments is carried out, the achieved results are compared with the planned ones. Depending on the results, the project is adjusted.

Implementation Features

Real investments act as the main tool for implementing the developed company development strategy. The main goal of this process is ensured through the implementation of effective financial projects. Moreover, the strategic development itself is directly a set of implemented plans. Analysis of real investments shows that it is precisely such an investment that ensures the company successful entry into new regional and commodity markets, and a constant increase in its value. This method of financing is closely interconnected with the operating activities of the company.

Competent management of real investments allows us to solve the problems of increasing production and sales volume, expanding the range of products, improving their quality, and reducing current expenses. Along with this, the indicators of the upcoming operational process, as well as the potential for expanding activities, will largely depend on the financial projects implemented by the company. Real investment contributes to a higher level of profitability.

The ability to generate a significant rate of return acts as one of the incentives to continue entrepreneurial activity. Realized investments provide the company with a steady flow of net cash. It is formed at the expense of intangible assets and depreciation from the fixed assets even when the operation of the projects does not generate income. The assets under consideration are characterized by a high level of anti-inflation protection. As practice shows, in conditions of inflation, the growth rate of prices for real investment objects not only corresponds to, but also often outstrips its pace.

Negative traits

The assessment of real investments shows a high risk of their moral aging. It accompanies activities both at the stage of project implementation and at the stage of their subsequent operation. The intensive technological process has created a tendency to increase the level of this risk in the course of real investment. Invested assets are characterized by the least liquidity. This is due to the narrow target orientation of most investment forms. Being incomplete, they practically have no alternative use in the economy. In this regard, to compensate for the incorrect management of real investments is very problematic.

Acquisition of property complexes

This is one of the areas in which real investments are made.The acquisition of property (integral) complexes is an operation of large companies, through which regional, commodity or sectoral diversification of activities is ensured. The result of this form of investment, as a rule, is the “synergy effect”. It consists in increasing the aggregate price of the assets of both firms (relative to their book value) due to the ability to more efficiently use the overall financial potential and reduce operating costs, complementing the product range and technology of manufactured products, sharing the sales network at different regional trading floors and other similar factors .

Building

This investment operation is associated with the construction of new facilities with completed technological cycles for a typical or individual project in specially designated areas. The company resorts to new construction in the event of a dramatic increase in its operations in the future, its regional, sectoral or commodity diversification (the formation of subsidiaries, branches, and so on).

Reconstruction

This form of investment provides for a significant transformation of the entire production process based on modern scientific and technological achievements. Reconstruction is carried out according to a comprehensive plan for a radical increase in the production potential of the company, the introduction of resource-saving advanced technologies, a significant increase in the quality of manufactured products, and so on. During this process, individual buildings and premises can expand (if new equipment cannot be installed in existing ones), constructions and buildings of the same purpose can be constructed on the site that are liquidated on the territory of the company, the operation of which for future economic and technological reasons is not practical.

Modernization

An investment operation of this type is associated with improving and bringing the current part of the main production assets into a state that corresponds to the current level of technological processes. This is achieved through constructive changes in the main complex of equipment, machines and mechanisms that are used by the company in the course of operations. Re-profiling is considered a derivative of modernization. During this investment operation, a complete change of production technologies for the manufacture of new products is carried out.

Single hardware upgrade

This form of investment refers to the replacement (due to physical wear and tear) or additions (due to the increase in volumes and the need to increase labor productivity) of the existing complex of machines with their separate new types that do not change the general scheme of the process. Update characterizes mainly the simple reproduction of the active part of fixed assets.

Problem of choice

The investment forms listed above can be reduced to three main areas:

1. Capital investment.
2. Innovative investing.
3. Investing in the growth of current assets.

The choice of a specific option is determined by the objectives of commodity, industry or regional diversification of the company’s activities aimed at increasing the volume of operating profit, the possibility of introducing labor-saving technologies and new resources that reduce costs, the potential that sources of real investment have (capital in money and other terms that is attracted for making investments).

Long term security

Such investments are made for a period of 3 years or more. Effective regulation of the company ensures its successful development in a competitive environment.This directly relates to the complex process of long-term investment. The quick and correct conduct of events in this area allows the company not only not to lose its main advantages in the competition for holding the market for the sale of its products, but also to improve existing production technologies. This, in turn, contributes to further effective functioning and profit growth.

All the main regulatory functions are carried out within the framework of the developed strategic plan, ensuring the implementation of the main concept. The allocation of resources, the coordination of the work of various departments, the organization of the structure, and relations with the market allow the company to achieve its goals, making optimal use of the available funds. The development of a long-term investment strategy is a rather complicated process. This is due to the impact of many external and internal factors on the financial and economic situation of the company.

Recently, models that contribute to assessing the investment prospects of enterprises are becoming more and more popular. The main tasks in this area are the selection of solution options, forecasting of priority guidelines and identifying reserves to increase the profitability of the company as a whole. It is quite popular to use various kinds of matrices, the formation and analysis of models of initial system factors. Each specific situation will determine a particular line of behavior with long-term investments.