Valuation of investments - a process which requires the conduct of the Executive certain skills and competent approach.The fact that the investor is concerned to maximize profits, while having a minimal risk of loss of investment.Many entrepreneurs invest gradually, assessing the degree of reliability and profitability.If you make a rash step, you can easily lose all the money.
Valuation of investments is one of the ways to manage finances.Its essence lies in the fact that the experts analyze the profitability of the project and its degree of risk, as well as the payback period.As part of the analysis takes into account economic, political and social factors, as well as validation of business plans.This procedure allows to accurately determine key indicators and identify their level of efficiency.
As a rule, investment appraisal is needed to determine the most favorable credit terms or capital investment, as well as to find an investor who will help to realize this or that project.
result of this procedure is to compile a detailed report, which contains detailed answers on questions about the effectiveness of invested assets as well as the level of profitability and the profitability of the overall project.Based on these data, the customer can decide whether it makes sense at all something to invest in this project, what are the options for improving it and refining.
In general, investments are divided into long and short term.This classification takes into account the terms of the sponsorship.Evaluation of long-term investment takes a long time, because the entrepreneur must undertake a thorough analysis and diagnosis of the initial stages of the birth and development of the project.Such a procedure will help to calculate the possible prospects for the next few years.If you do not, then most likely, the investor will simply refuse to provide sponsorship, because it will not know the plan of the organization.
There is such a thing as an estimation of efficiency of investment.It is a system of certain principles, which are designed to determine the effectiveness of choice for implementing the specific investment objectives.There are several principles of this procedure:
- Assessment, which is conducted on the basis of indicators of net cash flow.
- discounted to the present value of cash flows and the amount to invest.
- Choosing the discount rate, which is carried out during 2 points.
The fact is that if the investment appraisal is conducted properly, it is a pledge of confidence in the fact that the decision on financial investments made correctly, and the prospects evaluated with maximum accuracy.
There are several methods of assessment of investment, which are used by specialists:
- discounting.
- Calculation of the period for which this investment can pay off.
- The calculation of the rate of return expected to be available for the entire capital
- Determination of cost efficiency that went into production.
- difference between the amounts of income and expenses.
- Comparative analysis of income from the investment of money capital.
investment estimation accuracy depends on the complexity of the project.
methods related to discounting takes into account the efficiency of investments in a specific period of time to be determined in advance.As a rule, this method is applicable to long-term investments for a period of more than five years.
