The right investment decisions are considered to be the key factors for successful business operations, improving product quality, reducing costs, expanding production, increasing competitiveness and strengthening market positions. In this sense, the importance of long-term professional investment management for large businesses is increasing in the search for solutions that allow rational use of resources and achieve the best possible results.
Viola Funding Limited, offers high-quality services in the field of investment management for large businesses, financing of large projects.
The concept of investment management for businesses
The investment may involve the purchase of securities or other use of capital that is expected to return in the form of regular dividends / payouts in the future. In the context of microeconomics, investment refers to all assets acquired for the purpose of conducting a profit-oriented activities.
In general, investments are considered as cumulative costs in the form of long-term placement and use of equity or borrowed capital. Investments should be understood not only as capital investments, but also other necessary resources to create new assets. From the existing definitions, it follows that investment is any use of cash or cash equivalents, which is aimed at obtaining economic benefits.
This is achieved by acquiring assets that will generate income sufficient to cover the initial costs incurred and obtain positive financial results that satisfy project participants. The return on the initial investment must be appropriate for the different types of risk taken and the conditions under which it arises, i.e. ROI should be proportional to the risk taken.
Therefore, investments should be considered as a universal tool for converting accumulated cash into assets that provide a rate of return higher than or equal to the market interest rate. This allows business entities to achieve economic growth.
The main characteristics of investments include:
1. Investment refers to resources, which means not only money, but also other types of capital.
2. The purpose of each investment is to generate income and, accordingly, adequate benefits.
Investments are always a risky measure, and the higher the risk of investments, the higher their profitability. This requires the participants of each investment project to apply a comprehensive professional approach to assessing and managing risks at an early stage.
Types and classification of investment
In general, investment management can be classified according to the following main principles:
Types of investments depending on the purpose of financing:
•Investment in innovation. • Investments for business expansion or diversification. • Investments in the renewal of production and its adaptation to the requirements of the market and scientific progress.• Investments in “intellectual capital” or in improving the professional level of staff.
• Investments for the return of fixed capital.
Real investments are considered resources invested in the purchase (acquisition) of buildings, machinery, equipment, stocks of raw materials and other things.
Intangible investments are money invested in intellectual property, including patents, trademarks, inventions, know-how, licenses, and so on. These investments are made for the same purpose as investments in real assets, that is, increasing the profitability of the business.
Financial investments involve the acquisition of financial assets, which are defined as rights to income or capital gains, as well as rights to financial resources such as bank deposits.
Types of investments depending on the purpose of financing:
• Investments with financial income. In turn, these are investments with fixed income and investments with variable income. A characteristic feature of these investments is their use in assets in order to increase the income of the company.
• Investments that do not generate financial returns, but whose benefits are to improve other performance parameters (for example, social or environmental projects).
Professional investment management: Viola Funding Service
The investment decision-making process, known as part of capital budgeting, requires an analysis of the following three elements.
The goal of professional financial management is the desire of the financial team to maximize the value of the company. Increasing the value of the company is of paramount interest to shareholders, as it leads to an increase in their personal wealth. The most important group of decisions that a financial manager makes in this context is related to investment issues. The successful solution of the problem of distribution of capital and other resources contributes to the growth of the authorized capital and the achievement of the goals of business owners.
Viola Funding Limited, offers high-quality services in the field of investment management for large businesses, financing of large projects
These should be carefully reviewed by the finance team.
1. Expected cash flows.
2. The value of future cash flows corresponding to their security.
3. The level of reliability of expected cash flows.
Once the cash flows associated with an investment project are clearly defined, managers must evaluate the quality of the projects in terms of maximizing the wealth of shareholders.
Investment management decisions
Investment decisions are motivated by the desire of capital owners to improve their future wealth. But the choice of objects for investment and the comparison of various investment alternatives is carried out in the context of achieving more specific goals (for example, economic or technical).
When developing investment projects, it is important to find such options for the use of capital resources that allow participants to obtain the best possible results at an acceptable risk.
Regardless of what types of assets a company invests in, these solutions have some common features:
• Investment is associated with significant financial costs. • Every investment decision comes with some risk and uncertainty. • Investment decisions pursue certain strategic or operational goals. • Large investments pay off within several years.
Wrong decisions can permanently disrupt not only financial health, but also the further development of the enterprise. This is especially true when it comes to large-scale projects and structural decisions, the preparation and implementation of which require in-depth analysis, justification and evaluation.
When using funds for the acquisition of assets, the investment decision binds the financial resources of the enterprise and affects its structure for a long period.
If you need project finance and long-term loan or other financial support for a major project, please contact Viola funding Limited.
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