Economic essence of investments, their composition and structure

Investment as a process of investing capital involves a program of activities developed over time related to goal setting, the search for options and means of investment, the implementation of planned actions and monitoring the achievement of set goals, taking into account risk.

From business practice it is clear that the set of investment options, methods and types of resources used can be practically unlimited, which is determined by the nature of the business itself, the market in which it operates, and the ability of its owners to determine the priorities of investment goals.

When choosing an investment method, special attention is paid to the sources of funds that can be involved. In business practice, these methods are usually classified into two main categories - external and internal.

This article will talk about one of them, which is called the company's internal investment resources.

Forms of real investments

Real investing can take certain forms. The principle, method of investment, and its prospects will depend on them. Let's consider the main forms of real investment:

1. Construction. In this case, real investment is investing in the construction of a new facility that has an individual project and a completed technological cycle. Enterprises begin new construction when the scope of work expands, its direction changes, and a branch is created.
2. Real investments can be made in the form of purchasing complete sets of property. Such financial transactions are carried out by large enterprises when there is diversification of work, regional or product. In this case, the company’s assets grow, as the overall financial potential begins to be realized more effectively. At the same time, it is possible to reduce operating costs and also expand the sales market.
3. Also, real investment can be aimed at upgrading equipment. The technological process remains unchanged, but the equipment is replaced due to wear and tear, as well as due to obsolescence.
4. Reconstruction of the enterprise also requires real investment. This investment operation is carried out when the technological process is being transformed, cardinal changes occur. This is different from simply replacing hardware. The reconstruction plan is being approved, new effective technologies are being introduced. Sometimes production areas are expanded and new premises are built. Everything is done to optimize the work. For an investor, such an investment can be profitable, since the reconstruction is aimed at optimizing the operation of the enterprise, after which it is planned to increase profits.
5. The process of repurposing requires financial investments. Then, in connection with the release of new products, a complete change in the technology of the production process is necessary.
6. Modernization also requires real investment. When the active parts of production facilities need to be made modern, meeting new requirements, various design changes are carried out. A modernization project is being developed and new equipment is being purchased.
7. Forms of real investment also include financing the increase in the volume of material assets that are in circulation. The volume of assets increases to balance the development of current and non-current assets when investment work is underway. When production potential increases, more products can be produced. But this is only possible if the volume of a number of material assets is expanded: for example, semi-finished products, production materials, raw materials.

The types of real investments include financial investments in intangible assets. There are two key forms of such financing:

• development of new scientific and technical products;
• acquisition of finished products, patents for inventions, etc.

The technological process can be significantly optimized if real investments are directed to financing intangible assets.

Experts note that such a list of real investments can be reduced to a more capacious scheme. Types of real investments are:

1. financing the increase in current assets;
2. innovative real investment;
3. capital investments.

It is extremely important to determine the most optimal forms of real investment in a timely, competent manner, in full accordance with the real conditions of production and market, the financial environment, and select promising, reliable objects for investment. Then the work will be effective, and the investment will quickly pay off.

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Equipment under a leasing agreement

Legal, organizational and economic features of leasing are determined by:

1. Federal Law of the Russian Federation No. 164 “On financial lease (leasing)” dated October 29, 1998.
2. Art. 665 of the Civil Code of the Russian Federation, on concluding a leasing agreement (or financial lease).

According to these legal acts, equipment leasing is formalized. This means that the lessor, unless otherwise provided by the leasing agreement, is obliged to:

1. Buy equipment selected by the tenant from a specific seller.
2. Provide it to the tenant for a certain fee for temporary use (ownership) for business purposes.

Real investment management

Only competent management of real investments determines the success and performance of an enterprise or business. Now we will look at the main stages and methods of managing real investments that ensure the most effective financing.

Analysis

First of all, a detailed analysis of financing is carried out. The real state of investment for a certain previous period of work is analyzed. The policy of managing real investments involves a thorough study of existing experience. It is important to assess the degree of investment activity of the company, as well as determine the degree of efficiency and effectiveness of programs that have already been started and completed at the previous stage of work. The analysis takes place in several stages. Real investment management should be based on objectivity:

1. First, they examine the dynamics of financing in the growth of real assets, as well as the percentage of real financing in the volume of total investments of the enterprise.
2. Then the level of effectiveness of individual financing programs and the degree of their successful implementation are examined.
3. Then it is important to find out how successful past investment programs have been. It is necessary to determine the exact amount of investment that is required to complete the programs.
4. At the fourth stage, the final stage, an analysis of the effectiveness of financing programs that have already been completed is carried out. It is determined to what extent they correspond to the planned indicators at the operational stage.

Determination of forms of financing

The specific forms of real investment are precisely clarified. It is important to use the available types of financing flawlessly. They are chosen taking into account specific areas of the company’s investment work, which become the basis for expanding current, intangible assets.

It is necessary to pay attention to statistics and the dynamics of the enterprise. If we are talking about an intangible investment object, it is necessary to give a competent analysis of its prospects as a source of profit.

Clarification of the full volume of real investments in a given period of activity

Experts determine the optimal investment size. The volume of increase in the enterprise's key assets planned for this period will be of great importance. Be sure to take into account the dynamics of growth in the volume of investments that have not yet been completed.

Selection of specific investment projects

A competent policy for managing real investments is also based on the precise selection of specific investment programs, which must fully comply with the forms and purposes of real financing. Detailed business plans are created. When the financing project is small, the plan can also be brief, but with mandatory coverage of all key points.

Specialists examine current offers on the financing market, consider prospects for purchasing assets, select investment properties with great potential, and carry out a thorough check of all selected investment properties.

Project effectiveness assessment

When investment projects have already been selected, it is necessary to evaluate their effectiveness as objectively as possible. All risk factors that need to be determined in advance must be taken into account. The main evaluation criterion is to ensure an increase in the company's market price. It is also important to check how the level of each project corresponds to the degree of planned profitability.

At this stage, be sure to identify all the risks that may accompany real investment in general. The role of such analysis is very important, since financing is often associated with the investment of capital in investment objects in large quantities. If all risks are not taken into account in advance, the solvency of the enterprise may drop sharply. When borrowed capital is attracted, this also leads to the risk of reducing the financial stability of the company. It is important to calculate in advance how investment risks may affect the financial stability, solvency, and profitability of the enterprise.

Formation of a real investment program

The competent formation of a real investment program is very important. All projects are evaluated, after which they are distributed depending on liquidity, risk, level of profitability, as well as compliance with the key goals of the company’s financial policy. Objective restrictions are taken into account, that is, the possible volume of formation of investment resources, the total volume of given real financing. It is planned to increase the market price of the enterprise.

It’s great if the formation of a real investment program went well, it corresponds to the key goals of the enterprise and takes into account all the risks. Then it will not need optimization. But it is not always possible to immediately achieve the effectiveness of the program. In this case, individual parts change depending on various factors that emerge during the implementation of the project.

Implementation of projects, investment programs

The stage of implementation of individual projects and the investment program as a whole is beginning. Here are the key tools with the help of which programs, projects, and the entire investment plan of the enterprise in general are implemented:

• project schedule;
• capital budget;
• financing scheme.

The calendar schedule must identify all the key periods when it is necessary to carry out specified types of work. Everything is done based on the functional responsibilities that are defined in the contract.

The capital budget is most often calculated for one year. It reflects revenues and expenses that are associated with the implementation of a specific investment project.

The financial base is specified in the financing scheme.

If you are going to invest in a specific enterprise, it is worth assessing the level of analytical work, the overall dynamics of activity, and the prospects of their financing plan.

Monitoring the implementation of the investment program

Then, when all the main work has already been done, they must constantly monitor the execution of the project and all its tasks. This stage of real investment management is also extremely important for the implementation of the program, maintaining profitability, and increasing the market value of the enterprise.

Types of leasing transactions (pros and cons of leasing transactions for the lessee)

In practice it is used:

1. A simple transaction that includes:
   Conclusion of an agreement.
2. Delivery of the leased object.
3. Payment for this supply and the leasing itself.
4. A multilateral transaction, including, in addition to the execution of a leasing agreement:
   Obtaining a loan to purchase a leased asset.
5. Payment and subsequent sale of this object.
6. Insurance and delivery of the leased object to the recipient.
7. Payment of leasing.

The total amount of leasing payments is stipulated in the contract for the entire period of its validity. Compared to bank loans, it is quite high. But the advantages of leasing are much greater. Thanks to him, you can:

1. Purchase the property you need without large one-time expenses, without collateral.
2. Quickly draw up an agreement on terms suitable even for medium and small structures.
3. Subsequently buy out the leased object.

Sources of financing for real investments

Let's consider the main sources of financing for real investments that are actively used in a modern market economy.

There are three key sources:

• borrowed;
• involved funds;
• the company's own funds.

Let's look at the sources in more detail.

Own funds

Most often, own investments are formed through depreciation of fixed assets, as well as using own profits. Large companies use any available funds, including funds from social, pension, and insurance funds.

Involved funds

Raised funds are widespread sources of financing real investments. Corporatization plays a big role here. It is in demand when implementing large-scale projects. This is a good alternative to a loan. However, credit is still used more often, although corporatization requires lower costs.

There are various advantages to corporatization:

• you can attract new funds in significant amounts;
• there are no time restrictions on the use of funds;
• it is very important that payments for the use of money will directly depend on the performance of the joint-stock company;
• the price of funds raised will be lower if the issue size is large.

Investors have a negative attitude towards a new issue of shares if the company has been operating for a long time. As a result, the company's stock price may fall.

Budget financing can be provided. This is widely in demand in the social and industrial sectors. This method can also be used during an economic crisis. It is good to use budget financing when a specific region, industry, or promising enterprise is developing. This method is relevant when a company produces strategic, knowledge-intensive, scarce products.

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Targeted bond loans (advantages and disadvantages)

This is a special type of long-term bonds that can be issued by an enterprise (the organizer of an investment project). Bonds are placed on the market, creditors buy them, and the project is implemented with the proceeds. This is kind of the equivalent of a loan.

Important! The issue of these bonds is strictly targeted.

Pros of bonds:

• simplified interaction between the borrower enterprise and the lender: without presentation of property collateral, voluminous financial information, without a report on the implementation of the project;
• You do not need a business plan to submit to a credit institution; it is enough to fill out its description or feasibility study;
• absence of intermediaries – direct access to investor funds;
• non-interference of the lender in the affairs of the borrower;
• an opportunity for an enterprise to repurchase its own previously sold bonds on the secondary market.

Disadvantages of bonds:

• due to the cost of borrowing, it makes no sense to finance all investment projects in this way;
• involve significant amounts of borrowing.

Only a large professional enterprise with a good credit history can allow the issue of such bonds.

Independent investor position

External investments for an enterprise at many stages of its development (during restructuring) can be decisive. Taking this into account, potential investors, having assessed all available investment instruments, of which there are plenty today, can form an optimal and safe investment portfolio. Even private individuals can become active creditors by buying their bonds from companies.