Effective operation of any enterprisedepends on the correct investment policy of the management. When developing the right course, it is important to confidently operate with the concepts of gross and net investments, understand how they affect the state of the organization and the level of trust.
In the article we will consider what are the gross andnet investments, what are their differences, from which sources they are formed and for what purposes they are directed, and also we will find out what the calculated values of these indicators signal.
Прежде чем говорить о таких понятиях, как валовые and pure investments, it is necessary to be defined with the very concept of "investment". So, investments are monetary or material investments in order to obtain profit or other benefits. Objects of investment can be both production and non-productive sphere in the person of health, education, culture.
The role of investment in the modern economyit is difficult to overestimate. They affect all spheres of society by regulating and redistributing the benefits. Let's consider a simple example: financial investments in a production enterprise allowed to open a new workshop. In order to build it and lay the infrastructure, attracted construction organizations, which allowed the latter to earn. The new shop needs workers, so the number of jobs has increased, the unemployment rate in the country has decreased and the well-being of the population has increased. Due to the opening of the shop, the volume of production increased, and consequently the profit of the business entity also increased.
Workers of the new workshop were given the opportunityspend money earned on education, culture or invested in real estate. This example is quite specific, but it clearly reflects the importance of investment activities for the country's economy as a whole. Of course, the effectiveness of investments in the production sphere is much easier to assess, so we will continue to consider investments in the microeconomic sense, that is, from the point of view of a single production enterprise.
It is accepted to distinguish real and financialinvestments. Financial investments include the acquisition of securities issued by the state or another business entity. Real investments include investments in fixed and circulating assets, new construction, repair of production assets, acquisition of real estate and land, as well as investments in intangible assets: licenses, patents, research, staff development. Thus, we have smoothly approached the gross investment, which is the category of real investment.
Когда речь идет о валовых инвестициях, в первую the turn implies real, but financial ones can also be attributed to gross, if the investor acquires the shares of the company when they issue them first. Funds received from the primary issue of securities are primarily used to expand production assets and intangible assets: purchase of equipment, rent of premises, purchase of licenses, etc. Gross investments are investments in fixed production assets and working capital.
Gross investment is primarily aimed at maintaining and expanding fixed capital, which includes:
Gross investment is also a source ofincrease in working capital. First of all, we are talking about the reserves of raw materials and materials that will be needed when expanding production, for example, after the opening of a new workshop.
An important component of gross investments are the funds spent for the acquisition of intangible assets:
To intangible assets of the enterprise alsohuman capital also applies, so gross investments can be directed to personnel training, medical insurance. Such investments contribute to the growth of the company's prestige in the market and indirectly affect the value of its shares.
Proceeding from the directions of investment, gross investments can be divided into two groups:
The first group is depreciation.For the accumulation of this type of investment create depreciation funds. The volume of the fund is determined using the depreciation coefficient, which is calculated on the basis of the useful life of a particular type of equipment or building until they are completely physically worn. The value of the asset is transferred by finished products, and after its implementation, the pledged amounts are accumulated in the depreciation fund.
The second group is represented by investments aimed at increasing capital, they are called net. These include all types of investments mentioned above, except for depreciation.
The formula for calculating gross investment is as follows:
VI = A + CHI, where
VI - gross investments;
A - depreciation;
CHI is a net investment.
The ratio of gross investment and volumeDepreciation indicates the stage of development of an economic entity. The growth phase is characterized by excess gross investment over depreciation. If the situation is reversed, this is an indicator of a lack of production potential.
Gross investment in the macroeconomic system can also be calculated on the basis of the gross domestic product, which characterizes the total production of goods and services in the country:
VI = GDP - Pp - Pg - Rche, where
GDP - gross domestic product;
RP - consumer spending;
Wg - government spending;
Rche - the cost of net exports.
The sources of formation of the total gross investment include:
Many businesses are trying to attract funds.third-party investors for their development. This is especially true when implementing investment projects. As a rule, the risks in them are large enough, and the company tries to diversify them by reducing the volume of its own investments and increasing foreign injections. In this case, the organization retains full control over the project.
State funds are raised atimplementation of large projects that are important not only for a specific business entity, but also for the country as a whole. Infrastructure projects are often examples of public-private partnerships. There are also cases of public investment rights to land and mineral deposits. Special mention should be made of the situation when whole state enterprises act as an investment.
Net investment is part of gross investmentwhich is to expand the productive capacity of the enterprise and increase capital. Net investment is equal to the difference between gross investment and depreciation.
The net investment rate matters whenassessment of the state of the enterprise. A positive value of the indicator means that the enterprise is in the phase of growth, developing and expanding. Zero value indicates a simple reproduction of fixed assets. A negative value signals that the company does not even have enough money to upgrade production assets, the organization is in a state of crisis and has a real risk of bankruptcy.
Sources of net investments are similar to gross anddivided into own funds of the enterprise, net private investment and borrowed funds of banks, leasing and microfinance organizations. The main internal source is profit from the sale of goods and services and the share capital. In addition, the internal resources include profit from the sale of unnecessary, already depreciated property. The net investment from domestic sources is an indicator of organizational stability. It affects the level of trust in the company of third-party investors and credit organizations.
Чистые вложения относятся к реальным инвестициям, the purpose of which is to expand production and ultimately increase profits. The net present value of investments affects not only the stability of a particular enterprise, but also affects the related economic sectors in the country: from construction to healthcare, education and culture. Thus, investment activity contributes to the development of the country's economy as a whole and to the growth of the population's well-being.
Decrease in net investment signalsabout the beginning of a recession in the economy and the approaching crisis. The level of investor confidence decreases, and they transfer investments from real to financial, which generally aggravates the situation. Thus, the work of getting the country out of the crisis falls on the shoulders of the state.
Investment plays an important role in ensuringstable development of both a particular organization and the economy of the country as a whole. Gross investments relate to real investments and are directed to the reproduction and increase in fixed and current assets, as well as intangible assets. Gross investments consist of depreciation and net investment. Net investment is that part of the investment that is used to expand and modernize production, to acquire patents and licenses, to conduct research and to improve staff skills. The volume of net investment is an indicator of the stability of the enterprise and affects the level of confidence of external investors and credit organizations.
