Investment analysis - methods, financial attractiveness of an enterprise, project analysis

Business development requires investment, investment analysis is necessary for the investor, so it is better to understand the risks of investing, and also to understand in which area the investee works. Large investments in the project do not occur immediately, but in several stages, namely the study of changes in the investee, can show predictable results, as well as, if necessary, adjust the amount of investments.

Analytical study of the project for the investor is important not only at the beginning of the investment period, but also as a result of the completion of the project, as a tool with which you can see the investment errors. Experts consider the investment analysis as an independent type of calculations that have their own tools and methods, and it is not denied that some of the techniques are similar to the financial analysis of a company or a company, its economic activities, but in general, this is an independent investment discipline.

Investment analysis - what is investment and investment

The task of business activity always includes obtaining a stable income, which is possible to decide when a timely modernization of an enterprise is carried out, in other words, finding an investor for whom investment analysis is important, namely, understanding the economic and financial condition of an entrepreneurial activity of an investment object.

Investment ─ is the conscious action of the head of a company or enterprise to stop the organization’s money and resources from being used for development in order to gain more revenue over time.

An investor engaged in investing, engaged in activities that are determined by experts on the basis of this is:

  • the process of irreversibility of loss for the time period of the true liquidity of the invested object;

  • the presence of factors returning the object to the expected liquidity;

  • the existing uncertainty of investments due to the long time period of formation of the enterprise and its long-term work.

Experts distinguish between two types of investment activity:

  1. Investments are real, the conditions of which are the use of the object of investments of its own non-current assets for the release of goods and their sale.

  2. Financial investments, they are also called portfolio.

What is a project for investment

Each action project created by an investment object can be considered an investment project, an investment analysis is necessary to understand the amount of investment in a project, how it will affect its current activities and future business development. The investment planning stage is the initial and the main one for investing money in a project.

In other words, experts define an investment project as a program of actions with measures requiring financial investments, which must be reimbursed after a certain time of the project and receive profit from them. In order to make a decision by the investor on investing money, the information that is included in the investment project is considered, an objective decision is made at the end of the study of the presented material.

Experts to the main method of analytical study of the state of the enterprise is the modeling of the situation, which shows the state of the investment object, when made, or another decision about investing it.

What is a financial flow and budget approach

Financial analysis, investment analysis, can not be carried out without modeling the situation in the investment project, which in this method is considered for the entire time interval, investment planning is done.

The time interval for the implementation of the investment project can be divided into stages, and for each of them the amount of money necessary for investment (budget) is compiled, which should cover the expenses of the enterprise at this stage of development.

The balance for the budget created by experts is considered as the difference between investments and necessary payments, all these actions are considered as financial flow at a particular stage of the investment project. When all project factors are expressed in monetary terms, a picture of investments is obtained with several financial flows for each budget at each stage. These flows describe the entire investment process in a project.

Consider what the financial flow for an investee looks like:

  • investor spending for each budget;

  • what is the planned revenue at this stage from the sale of products of the enterprise;

  • what expenses at this stage are done by the owner of the company or enterprise;

  • what is the amount of tax deductions at this stage of development.

The initial period of any project, when preparations are made for the modernization of production, by experts is marked by negative parameters of financial flows, this is easily explained by preparatory measures and less waste (expense) of resources to create better conditions for future business activities.

When the preparatory period (investment) ends, the operational phase begins, at this time it is necessary to use the production capital located outside the company's turnover, experts note the positive dynamics of financial flows.


  • the profit earned and the necessary tats in production can have a positive direction or a negative value when expenses exceed profit;

  • a positive value can be obtained by closing non-efficient production departments, saving resources;

  • a negative value is often obtained when spending on equipment, when there is a saving of all expenses.

The analysis carried out for the investor should show the value of the financial flow at the end of each investment stage, for the investor it is important that this parameter has a positive trend.

Depreciation on production and profit on investments

Experts particularly noted in the analytical calculations of the research of investments, the role of the parameters of profit and financial (cash) flow, as well as depreciation (ability to extinguish the debt), namely:

  1. The profit of an enterprise or company has an economic rationale, this is when there is a growth of capitalization of production, an increase in business income, which is the goal of every businessman.

  2. When profit is considered in an investment project, it has a different meaning. This is the ability of the entrepreneur carrying out the project to pay the invested money, at each stage of the investment, referred to as depreciation.

For these reasons, the investor is always interested in the value, which in the project is characterized as depreciation, it is the return of most investments in the project at each stage of its implementation.

How is the analysis of the effectiveness of investments

In the process, when an investment analysis is carried out, an indicator is important, it is efficiency, ─ namely, actions for obtaining the best result when minimal funds are invested. The effectiveness of investing money in the object of investment, experts determine the observance of the interests of all responsible participants of the project when the assigned tasks are achieved. There are many options when a financial project, in general, has justified its purpose, but is not effective for its participants.

In other words, the effectiveness of the work in the project is evaluated by such parameters as:

  • the amount of money invested in the project;

  • how much the participant received during the implementation of the conceived project;

  • how much money is left after the payment of all compensations, as well as after the obligatory payments.

Experts recommend to evaluate the effectiveness of the following criteria, it is:

  1. How effective are the actions of the project participant in the investment program.

  2. What are the overall project performance indicators of its effectiveness.

Of great importance in the search for an investor plays such an indicator as the attractiveness of the project, in addition:

  • technological part of the project;

  • technical and organizational management decisions;

  • how the investment will be made.

Specialists in evaluating the effectiveness of using the principles are:

  1. Conducting research project at all stages of its implementation.

  2. Using the simulation of situations of flow movement: cash, resources, products, at each stage of the project.

  3. Knowing the planned profit to carry out cost analysis to obtain the desired result.

  4. Application in the assessment of the predicted, present and production value of products.

Experts in the work with the performance indicator apply the following factors:

  • how much the object needs to be invested;

  • what a profit;

  • amount of discount profit;

  • yield inside production;

  • investment return rate;

  • profit parameter of discount investments;

  • time interval of payback of money invested in the project.

At the initial stage of the project, calculations are always carried out in the current cost of production, then in projected and current prices. When the calculation and creation of a scheme of cash receipts for a project is carried out, it is recommended to conduct the calculation in the predicted value.

What are the objectives of the analysis of the effectiveness of cash receipts

Investment analysis in one of its tasks is aimed at determining all possible impacts on a project that may adversely affect all indicators of investment. At the end of the research, an economic conclusion is made for the further solution of the project financing.

Consider what tasks are set for investment, it is:

  1. Direct investment in the project solves problems, it is:

  • the need to understand how much the company needs for long-term investments;

  • making justifications and economic calculations to search for an investor;

  • identification of all factors (external and internal) that may affect the outcome of the project;

  • determining the forecast of the final result when the project is implemented;

  • finding solutions to get the best result, taking into account the minimum risk of investing money;

  • implementation of measures to control investment in the enterprise.

  1. Financial (portfolio) investment, analysis tasks are:

  • make an assessment of the policy of the enterprise and give an economic opinion in the information flow for investment in the economic activity of the enterprise;

  • organization of the structure of control over incoming investments and tracking the value of the company's securities of the company;

  • determination of the stability of the investee in the present moment of time and in the future;

  • creating a portfolio of investments;

  • taking into account the risks of determining the profit of the project;

  • finding the parameters of investment efficiency.

Experts emphasize that the implementation of direct and financial investments are two parts of a single investment process of an object.

Methods of analysis, its effectiveness

Financial analysis, investment analysis have a method of determining efficiency other than discount investments ─ the method of static analysis, which is calculated taking into account the parameters of planning, as well as project expenses. This technique is used when in the process of the investment program expenditures occur with a violation of uniformity, and the result is not stable.

There are options for this method:

  • when calculating the payback time of investments;

  • determining the best profitability of the enterprise;

  • determining the difference between the profits of the enterprise and investment costs, finding a balance in the financial flow;

  • finding differences in the effective investment and quantitative output of products;

  • using the comparison, the investment of money at each stage of investment, the option of capitalization of production is chosen.

The best way, according to experts, is when the effectiveness of investments occurs due to analytical studies of investments, which allows you to calculate and implement the project and the planned degree of profitability with the necessary investment.

Methods of analytical research investment

Specialists define the tasks that the investment analysis performs, are carried out by different methods, they provide an opportunity to fully evaluate the investment work at a certain time interval, both in statics and in the dynamics of events.

These methods include this:

  • horizontal way to research investments;

  • vertical analytical method;

  • comparative method of investment analysis;

  • coefficient method;

  • integral method of calculating the efficiency of investments.

Horizontal method

This method of analysis is carried out according to some parameters of investment work for a certain period of time, the trend (change) of growth of investment parameters for several stages of investment is calculated.

There are primary ways to determine the trend, it is:

  • when the parameters of the reporting time period are examined and their correlation with the previous period is made, it can be from a month to a year;

  • analysis of data from the reporting period and the same period 12 months ago;

  • conducting analytical studies to determine the dynamics of growth in different periods of time.

When the analysis of changes (trend) is carried out, the parameters of the reasons for the change in the results of investment work are ascertained.

Vertical method

This method is based on a structural analysis of the parameters of investment in the activities of business units when the importance of different structures in the work of an enterprise is taken into account, namely:

  • analytical studies of investments in different departments of a company or enterprise;

  • study of the resource capabilities of the enterprise;

  • what cash flows are generated by the result of the investment in the enterprise.

Comparative method

The investment analysis carried out in this way is based on consideration of the same indicators in different groups, when the absolute values ​​of investments are determined, namely the following variants of this analysis are applied:

  • studies of the parameters of one investment object and performance indicators for the selected activity on average in the market segment;

  • carrying out analytical studies in the work of the enterprise and the impact of investment on its activities, compared with competitors;

  • conducting a study of the reporting parameters of the enterprise and planned investments in it.

Coefficient method

This type of analysis is based on the calculated parameters and the comparison of the financial indicators of the enterprise by structure and division. Parameters that may affect investments are being identified, different options are applied, these are:

  • clarification of the liquidity of a company or enterprise, its ability to pay obligations;

  • how stable is the enterprise in money;

  • what is the profitability of business activities;

  • definition of activity parameters of the enterprise.

Integral method

With this method, the formation of a net investment in the investee. Apply computer technology, special programs. The main task of this method is to model the investor's profit according to financial flows (blocks), which will constitute a net investment in an investment object (enterprise).

The process of drawing up a model is carried out by a computer user when, after drawing up blocks, he fills them with available parameters on the reporting financial documentation of a company or enterprise. Special programs independently calculate how blocks created can affect the net investment in the investee.

Investment attractiveness

It should be noted that experts do not put forward a consensus on the notion of attractiveness of an enterprise for investment, but for analyzing an investment it is classified according to the signs, these are:

  1. The attractiveness of the enterprise for investments under the terms of its development, when considering the state of its economic activity. The investor can determine the time interval at which the investment in the investee will give the expected result.

  2. The attractiveness of the object of investment on the conditions for investment, when, according to various criteria of the company or enterprise, the ability of the enterprise to pay obligations is estimated and there is a demand for additional investments.

  3. The set of parameters of the enterprise is determined by its attractiveness, this is the financial condition, the economic possibilities of the investee when it is necessary to invest minimal funds and get the maximum income.

  4. Based on research on the effectiveness of investments is determined by the attractiveness of the company for investment.

To obtain a true flow of information about an investment project, an investment strategy is developed when the market in which the investee operates is studied.

Every company that operates in the market has its own investment appeal. The investment situation may be affected by the situation in the industry by region. Инвестиции привлекаются по условиям развития предприятия, а также по внешним воздействиям на работу предприятий.

When an investor decides to invest money in an investee, he must assess all the risks and many factors that will affect the efficiency of the development of the enterprise and obtaining high profits. In Russia, it is believed that production facilities are at a satisfactory level for investors, need investments, given the steady growth in business activity of enterprises.

When analyzing an investment it is necessary to always take into account the risks of investments, in other words, to simulate a situation in which an unfavorable moment may come for the operation of an enterprise, try to foresee these events and achieve good results.

Watch the video: DCF, Discounted Cash Flow Valuation in Excel Video (February 2020).