Investments play definitely important role in any enterprise and its not possible to do without this kind of economic activity. For the implementation of the priority tasks are needed a large amount of the assets, perhaps amortization (replacement of old equipment, unsuitable for further use, to a new) is needed, or innovation (replacement of old equipment by novelties with better productivity). Namely investment activity provides fulfillment of required tasks, which were named above. Investment activity consist of two indicators such as: the amount of net investments and the amount of gross investments. Gross investments - this is investment of money for certain period of time to acquire assets and the implementation of innovations, increasing the number of productive assets, the increase of the capital. Gross investments consist of depreciation and net investments. Net investments - are the same as the gross investments, but net investments do not include the amount of depreciation charges, as was mentioned by me just above.
It is said that economic development of enterprise namely from depends from the dynamics of the net investments. If the production and sale of goods at the enterprise are successful and net investments are dominated, it means that occurs the reproduction of non-current assets, and such enterprise has funds for its own development, ie may allow itself economic growth. If the net investments are negative or tend to zero, then this organization does not have the future, and sooner or later, the organization will be declared bankrupt by arbitration court.
Change in national income may also depend on the net investments. So may happen if the investment of funds in a particular industry for a certain period of time (usually a year) brings national income for the same period of time in the future. The value of this income is equal to the sum of all created goods in the past. Inflation can be profitable for the enterprise and therefore it is also possible an increase of the national income. Occurrence of changes in national income can be explained by the different intensity of the use of money capital.
Such changes occur in the microeconomic sphere and have a local character.
Investment activity is an indication of the financial and economic condition of the enterprise - it shows if such an enterprise is competitive or not.
Enterprise will not work normally without investments. Investments provide stability and thanks to them profits grow, and profit increase is the main goal of any entrepreneur.
Such industries as: science, medicine, sport, cultural sphere, information technologies, protection of nature and innovations are invested. You can invest in people. Many of these investments provide the development of spiritual world of man, many are aimed at life extension. The larger investment structure (department by types and directions of use), the more effective is the use of investments. Profitability serves a structure forming criterion.
If the investments are non-governmental, then they are directed to the industries with fast turnover of capital. These industries must be profitable, because industries with low profitability, after all, remain not fully invested.
Investing also has measures: excessive investment causes inflation, and lack of investment leads to deflation.
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