INVESTING IN A BUSINESS SYSTEM

Abstract

Every company tends to maintain current liquidity and to make progress, ie. to develop. This is something that can be achieved through investment. Investment can be in production, in terms of new technologies, new products etc. And with this form of investing, there are cases of companies investing in the securities finance market, which makes a profit. When investing, there are micro and macro aspects.
When the conducting investment analysis is performed, and during the investment man- agement, respectively the evaluation and ranking of the project it is significant classification of independent and mutually exclusive investment projects. The theory and practice are two main approaches to present the assessment and measurement of financial benefit or impact of invest- ment projects: traditional or contemporary approach and accounting or financial access.
The investment decision is taken on acceptance or rejection of the proposal based on the 4 methods of determining the required capital: methods of evaluating the rate of return, payback period method, the method of internal rate of return and net present value method.
The method estimates the rate of return is actually the ratio of the average annual profit after tax and investment in a particular project.
Methods of repayment period taking into account the size and temporal separation of cash flow for each period of the project. The method of the discount flows are internal rate of return and present value method.
With the method of the present value all cash returns are discounted to present value, us- ing the required rate of return.
The index of profitability of the project in other words, ratio of benefits and costs, is the ratio of the current value and subsequent cash flow and start-up costs.
In times of inflation, the company invests less, because of the smaller rate of return and therefore the motivation factor is decreased.
Therefore, the consideration of improving and prediction should be the main priority in the process of gaining the optimal decision.