Investments

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Investment is one of the company's financial assets (eg.real estate or intangible assets) that are not used by the unit, but were acquired in order to achieve economic benefits. Investments also include assets acquired to achieve the economic benefits resulting from the increase in the value of these resources and obtain revenue from them in the form of interest, dividend or the revenue growth from commercial transactions.

Investments is a commitment of a specific amount of money for a certain period of time to get future return which compensates the investor time when money was involved, the estimated rate of inflation and investment risk. Investor can be a private person, governmental agency, pension fund or corporation.

There are various forms of Investment:

  • commercial, where the investor is expecting a financial benefits,
  • non-commercial, or public investments, which are primarily R & D investment, there are no direct financial benefits or are they so small that they do not cover expenses incurred. In this case, spending could be offset by social benefits.

Features of investments

For an asset to be classified as investment, it must meet three conditions:

  • Must be purchased or obtained free of charge in the form of donations,
  • Objective of acquisitions is to achieve economic benefits,
  • The benefits that company derive from the possession of individual asset, come directly from him.

Types of investments

Depending on the subject of investment it can be divided into:

  • tangible - involving the acquisition of buildings and structures, machinery and equipment, vehicles, manufacturing facilities, inventories, etc.
  • intangible - such as the purchase of patents, licenses, etc.
  • financial - one that means the deposit of cash in shares in other companies or in long-term securities such as stocks, bonds, Treasury bills.

Tangible and material investments are used for the restoration of the used property to maintain the existing economic potential of the company and for the expansion of this potential. Financial investments are aimed at multiplying the capital and to achieve maximum profit from investments in a particular term, for example in the form of dividends paid on shares.

See also:

References