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Introduction to business investment methods and risk factors

By: kk Aug. 04,2021

Enterprise investment is an economic activity in which an enterprise invests its own assets and takes corresponding risks in order to legally acquire more assets or rights. A - a kind of economic activity. The following is to learn to bring you the relevant ways of enterprise investment, welcome to read.

The way companies invest

(1) Direct investment and indirect investment

According to the relationship between investment and enterprise production and operation, investment can be divided into two types of direct investment and indirect investment. Direct investment refers to the investment of funds in the production and operation of assets, in order to obtain profits. Indirect investment, also known as portfolio investment, refers to the investment of funds in financial assets such as securities in order to obtain dividends or interest income.

(2) Long-term investment and short-term investment

According to the length of investment recovery time, investment can be divided into two types of short-term investment and long-term investment. Short-term investments, also known as investments in liquid assets, are investments that can and are intended to be recovered in less than one year. Long-term investments are those that can be recovered in more than one year.
Long-term investments are investments that can be recovered in more than one year.

(3) Inward and outward investments

According to the direction of investment, investment can be divided into two categories: inward investment and outward investment. Inward investment, also known as internal investment, refers to the investment of funds invested in the enterprise to acquire various production and operation assets. External investment refers to the enterprise's investment in cash, in kind, intangible assets, or in the form of purchasing stocks, bonds and other marketable securities to other units.

Four main types of corporate investments


1 Before investing in a project, companies need to understand what are the main categories of corporate investment, and then choose the appropriate investment method for themselves. Generally speaking, there are the following classifications of business investment:

2 According to the investment recovery period classification

According to the length of the investment recovery period, investment can be divided into short-term investment and long-term investment. Short-term investment refers to the recovery period of less than one year, mainly including cash, receivables, inventory, short-term securities and other investments; long-term investment refers to the recovery period of more than one year of investment, mainly including fixed assets, intangible assets, foreign long-term investment, etc.

3 According to the direction of the investment is different

According to the different directions of investment, it is divided into inward investment and outward investment. From the enterprise's point of view, inward investment is project investment, which refers to an enterprise's investment in fixed assets, intangible assets, other assets and advances to working capital for the production and operation of the enterprise. External investment is an investment made by an enterprise to purchase marketable securities or other financial products issued by the state or other enterprises, or to inject funds into other enterprises (such as affiliates, subsidiaries, etc.) with monetary funds, physical assets or intangible assets.

4 According to the degree of involvement of investment behavior

According to the degree of involvement of investment behavior, it is divided into direct investment and indirect investment. Direct investment includes internal direct investment and The former forms the assets directly used for production and operation within the enterprise, while the latter forms various equity assets held by the enterprise. The latter forms various equity assets held by the enterprise, such as shares in subsidiaries or affiliates. Indirect investment refers to the indirect transfer of funds through the purchase of financial instruments issued by the investee. Indirect investments are investments in which funds are indirectly transferred and delivered to the investee through the purchase of financial instruments issued by the investee, such as shares, bonds, funds, etc. issued by the enterprise to the specific investee. Indirect investments refer to investments in which funds are indirectly transferred to the investee through the purchase of financial instruments issued by the investee, such as stocks, bonds, funds, etc.

Risk factors for business investment

1、Investment income

Although there are various purposes of investment, the fundamental motive is to pursue more investment income and achieve the maximum investment value. investment value-added. Consider investment income in the investment, requires the choice of investment program must take the size of the investment income to take the choice, To choose the program with certainty of investment returns, to analyze the factors affecting investment returns, and for these factors and its role in the direction of the investment program, the degree, to seek effective ways to improve the return on investment.

2、Investment risk

Investment risk is expressed as the uncertainty of future income and value-added. The main factors that induce investment risk are political factors, economic factors, technical factors, natural factors, and the Economic factors, technological factors, natural factors and the enterprise's own factors, a variety of factors often combined together to affect.
Considering investment risk in investment means weighing the relationship between risk and return, fully and reasonably predicting investment risk, preventing and reduce the possibility of investment risks bringing losses to the enterprise, and propose reasonable strategies to avoid investment risks in order to minimize the implementation of investment The risk of investment is minimized.

3、Investment elasticity

Investment elasticity involves two aspects: one is the scale elasticity, that is, the investment enterprise must adjust the investment scale according to its own capital available and the market supply and demand situation. The second is structural elasticity, that is, the investment enterprise must adjust the investment structure according to the market The second is structural elasticity, that is, the investment enterprise must adjust the investment structure according to the changes in the market, mainly to adjust the existing investment structure, this adjustment can only be made if the investment structure has the elasticity. This adjustment can only be carried out under the circumstances of the investment structure is flexible.

4、Investment management and management control ability

External investment management and internal investment management, involving many factors, complex relationships, management difficulties. For example, stock investment requires solid securities knowledge and strong securities operation skills. Therefore, external investment requires corresponding business knowledge, legal knowledge, management skills, and management skills. Therefore, foreign investment should be based on business knowledge, legal knowledge, management skills and market operation experience. In many cases, the acquisition of partial or full operational control of other companies through investment In many cases, it is important to consider the amount of investment necessary to gain partial or full operational control of other companies in order to serve the business objectives of the company. This requires careful consideration of the amount of investment necessary to have the necessary management control and how to realize its rights after obtaining control.

5、Funding capacity

Foreign investment is the transfer of the enterprise's capital to other enterprises for a certain period of time. This transfer must not affect the The normal turnover of funds required for production and operation of the enterprise is a prerequisite. If the enterprise is short of funds and cannot maintain normal production, and the fund raising ability is weak, the foreign investment will be affected. and weak, foreign investment will be greatly restricted. External investment decision requires the enterprise to be able to raise the required funds in a timely, adequate and low-cost manner. The company must be able to raise the required funds in a timely, adequate and low-cost manner.

6、Investment environment

The investment environment under market economy conditions is characterized by complex composition and rapid changes. This requires financial management personnel in . Investment decision analysis, must be familiar with the elements and nature of the investment environment, recognize the characteristics of the investment environment, foresee the development of the investment environment development of the investment environment, pay attention to the impact of the investment environment, and constantly enhance the ability to adapt, adaptability and utilization of the investment environment. According to the development and changes of the investment environment, we should adopt corresponding investment strategies.





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