Efficiency of Investments
Evaluation of investment efficiency.
The effectiveness of investment is determined by solving a set of tasks. These include assessing the feasibility of the project, the absolute effectiveness of the project and comparative effectiveness.
Project realizability means the possibility of itsimplementation with respect to all the parameters of financial, technical and economic nature. Absolute efficiency of the project implies exceeding the significance of the achieved results over the produced costs of resources. By comparative efficiency, we understand the possible effectiveness when comparing different alternative designs of projects.
Efficiency investment of a separate project.
Possible effectiveness of individual investmentprojects is characterized by a system of indicators that reflect the ratio of resource and material costs and future results in the interests of the participants in the investment project. At the same time, it is possible to reflect the effectiveness of investments by the ratio of the project's result to the costs incurred by it. The effect of investment can be calculated as the result of the difference between the result and costs.
Types of investment efficiency.
There is financial (commercial), budgetary and economic efficiency of investments.
Commercial - characterizes the investmentthe attractiveness of the project itself for investors and its financial viability. Budgetary - shows the financial implications of the project for federal, regional or local budgets. Economic - takes into account the costs and correlates them with the results, while all expenses that go beyond the direct interests of the participants of the investment project that can be expressed in the value dimension are taken into account.
In assessing the effectiveness of investments,social and economic efficiency of investments, that is, all possible economic and social consequences of project implementation are investigated, as well as all costs that will be associated with carrying out social activities and environmental protection activities.
Results and cost indicators are estimated inwithin the settlement period. Its duration depends on the duration of the creation and development of the facility, the service life of technical equipment, the conditions for achieving the planned profit characteristics, as well as the specific requirements of investors.
The efficiency of investments is estimated by the methodologyUNIDO. In the Russian practice, the Methodological Recommendations developed for it are used to evaluate the effectiveness of projects with a view to their selection for future financing. Evaluation methods are divided into simplified, applied for the initial preliminary selection and those that take into account the change in the value of money over time.
Indicators of investment efficiency.
The period of return (payback) expresses the connection between net investment and proceeds from the implementation of investment decisions.
A simple rate of return expresses part of the costs that are reimbursed in the form of profit per one interval of investment planning.
The accounting rate of return shows the effectiveness of investments as a percentage of the proceeds of money in relation to the initial amount of investment.
The accounting return factor is calculated by dividing the annual average profit by the average cost of investing capital.
The evaluation of investment efficiency hasgreat importance in doing business. In case of misuse of the investment funds provided, low returns, their shortage, one should think about the need to select the most effective methods for analyzing projects that are being implemented or planned for implementation.