How to find gross investment. Investments, directions, source. Gross and net investment. Indicator value and calculation

25.12.2021

In order to increase production capacity, technical development, and improve the state of the material base, enterprises need to make certain cash injections, since it is not economically efficient to take funds from working capital for these needs, then you have to look for and use third-party financial investments in the form of gross investments.

Definition

Gross investment- the total amount of funds that investors invest in new construction, overhaul structures, buildings, acquisition of objects and means of labor, intangible assets and inventory. They are directed to the maintenance and growth of fixed capital, stocks. With their help, the normal functioning of the enterprise, financial stability, and an increase in the profitability of economic entities are ensured.

Gross investment is the total amount of an investor's investments in any investment object. And this is regardless of the form in which these investments were made and on what part of the object they were spent.

Gross domestic investment (GVI) - investments of the country's inhabitants in the products of their state and their expenses for the purchase of imported goods. VVI are often expressed in monetary terms or as a percentage of GDP.

Structure

Gross investments include depreciation, which is investment resources that compensate for the depreciation of fixed assets, the cost of repairs, restoration, as well as net investments, i.e. capital investments in work in progress and inventories.

Net investment characterizes the change in the value of fixed capital after the amount of its depreciation has been accrued.

Fixed capital, as the main component of gross investment, includes:

restoration of used funds as a result of moral and physical wear and tear;
renewal of production facilities - replacement of equipment, change of production technology to a more progressive one;
reconstruction, modernization of production;
housing construction costs;
costs for licenses, trademarks, patents, property rights, inventions, know-how.

Gross investment is a cost of a socio-economic nature, i.e. investment in human capital: staff development, improvement of the motivation system, which, in turn, affects the increase in productivity and profitability of the enterprise.

Calculation

Gross investment is equal to:

Vn = An + Chn, where
Вн - gross investments in the n-th year;
An - depreciation in the n-th year;
Chn - net investment in the n-th year.

If the value of Vn is less than An, then there is a decrease in production potential, as a result, a decrease in the volume of output (speaking of the macro level, we can say that the state "eats" its capital, similarly with the level of the enterprise).

When the value of Bn equals An, then there is no economic growth and the production potential does not change (the state/enterprise stands still).

In the event that the volume of gross investment is greater than depreciation deductions, the economy is at the stage of development, since a wide renewal of its production potential is ensured (the state / enterprise has a developed economy).

Sources

The sources of gross investment are:

own cash investors, individuals, co-investors;
borrowed funds: bank loans, funds of other financial institutions;
state budget funds;
sinking funds;
funds from participation in trading on stock exchanges.

The main investor, in order to reduce investment risks for the project, invites other interested co-investors to cooperate.

Public funds are spent on gross investment when the project is important to the government. Everything happens in the form of a public private partnership - the transfer by the state into private hands of rights to deposits or land, state-owned enterprises.

Efficiency

For an enterprise, gross investments are profitable if they give a calculated profit at the end of the period of implementation of the planned investment project.

In order to increase the efficiency of investments, it is necessary to pursue a competent policy of reproduction of fixed capital and funds that guarantee the restoration of fixed production assets, their quantitative composition and qualitative technological organization.

The efficiency of using gross investments depends on their structure: composition, direction of use, source of formation. But the fundamental criterion is profitability, it is this that determines the priority of investments.

At the macroeconomic level, overinvestment is inflation, and underinvestment is deflation. Such imbalances in the economy are regulated by an efficient system of taxation, government spending, fiscal and monetary policies.

Role in economic development

The role of investment for producers is as follows - enterprises achieve an increase in productivity, profit growth, a solid business foundation, individual income by effectively attracting additional capital in the form of investments that reproduce fixed assets, increase stocks.

On the state level gross investments show the state of the economy, the level of GNP, characterize how much the products of domestic manufacturers are in demand, whether investors want to invest in it, whether it is profitable. Based on these data, the state should create optimal conditions for manufacturers so that their products are in demand, both in domestic markets and abroad. To do this, the government must provide benefits, subsidies, subsidies, and regulate taxation.

Gross investments play a role in the economic development of the country, in building a modern high-tech material and technical base. Also, one cannot do without investments in the "knowledge economy", the so-called sphere of education, science, biotechnology, information technology, health care.

An effective method of developing and promoting a company is to invest in its values. This contributes to the development of large organizations and reduces the risk of their bankruptcy. Medium-sized enterprises get the opportunity to grow and form corporations.

Investments

To increase the profitability of the company, its leader must properly manage investment resources. Net and gross investments have an impact on the development of a private or state business entity, and also ensure their normal functioning. They are aimed at stabilizing the organization's resources and increasing them.

What are the contributions

Classifying investments according to the method of accounting for funds, they can be divided into net and gross.

Net investment is cash flows aimed at increasing the capital of the company involved in ensuring the normal functioning economic system and improving the living standards of project participants. Gross investments include investments in fixed assets. They consist of paid construction services, the object of which is production facilities, the cost of purchasing new or additional equipment, as well as the cost of modernizing it. They reflect the totality of net investment and depreciation, which covers the depreciation of fixed capital and its restoration to its original state. Net investment is an integral part of gross financing, so it is difficult to identify parameters by one type.

Gross investment objects

Types of investments

One of the elements of gross investment is fixed capital. It contains funds for the restoration of its used part in the form of moral and physical wear and tear. At his expense, work is being carried out to modernize and reconstruct production lines, as well as to upgrade equipment and change technology to modern methods that provide high performance indicators.

Working capital, presented in the form of stocks of raw materials, materials and finished products, is not included in gross investment in full. Since the calculation of the value takes into account only changes in parameters over a given time period, with a general increase in gross investment, contributions to working capital can be expressed as a negative number.

The inclusion of intangible assets in investments can be identified as the right to property or possession in relation to real estate. Trademarks, brands, licenses, inventions, patents and software products are also constituent elements of the parameter.

The composition of gross investments includes contributions to the improvement of human potential and to ensuring a decent level of parameters in the social sphere. Raising the qualifications of employees, improving their living conditions, payment for the education of the children of employees of the organization, suggest an increase in the profitability of production. This is due to the high qualification of employees and their rapid recovery of physical and moral strength, due to the creation of normal living conditions.

Structure of gross investments

An indicator that identifies the state of gross investment is taken into account in the system of economic criteria of an individual enterprise and is used in the calculation when compiling statistical reporting. It is included in the system of parameters of national public accounts and helps to evaluate macroeconomic indicators.

According to the objects of investments, financial and real investments are distinguished. The objects of real investments are:

· Fixed assets;

· The property;

· Material and industrial stocks;

· Intangible assets;

· Professional development and training of personnel;

· Scientific and design work.

The latter objects are classified as investments, provided that they are carried out within a certain framework of the investment project.

The objects of financial investments are:

· Bank deposits;

· Securities;

· Foreign currencies.

Gross investment is the total volume of a certain period of real investment, which is aimed at construction, growth of commodity and material assets as well as for the acquisition of production facilities. Such costs are incurred by investors for:

Ø Own funds (depreciation and profits);

Ш Funds raised (share contributions and proceeds from the issue of shares);

Ш Borrowed funds (bonded loans and credits).

Gross investments are used to maintain and increase fixed capital (fixed assets) and reserves. They are made up of depreciation, which is the investment resources necessary to compensate for the depreciation of fixed assets, their repair, restoration to the previous level that preceded production use, and from net investment, i.e. capital investment in order to increase fixed assets for the construction of buildings and structures , production and installation of new, additional equipment, renovation and improvement of existing production facilities.

Net investment is the so-called amount of gross investment, determined with the calculation of a decrease by an amount equal to depreciation charges in a certain period. Due to this indicator, the capital invested in production is reimbursed. Therefore, we can talk about economic profit if the depreciation deductions do not exceed the amount of gross investments, that is, the enterprise has positive net investments. Thus, the dynamics of net investment reflects, with the help of its indicators, the nature economic development at various stages.

Growth in the amount of net investment entails a consistent period of increasing income. At the same time, the growth rate of income is many times higher than the growth rate of net investment. This process has a literary name - "multiplier effect".

Net investment can be:

· Positive - gross investment is greater than depreciation;

· Zero - gross investments are equal to the size of depreciation;

· Negative - the amount of depreciation exceeds the amount of gross investment.

Net investment is the resources that are spent to create capital goods. These benefits eventually wear out and become unusable for further use. This is where investments come to the rescue, with the help of which it is possible to restore depreciated capital goods, which will give a positive result for production and the expansion of consumer goods.

Each time, at the time of the implementation of net investment, that is, with capital investment, the productive effective physical capital increases by the amount invested in the corresponding prices. Despite this, the cost of production capital changes over a given period and as a result of inflationary processes.

Leasing has recently become one of the effective and traditional methods of investment instruments. With the help of this program, profound transformations of the world economy are carried out due to the effective management of financial resources.

Net investment in leasing is a process that provides a gross investment in the so-called lease. Investments are discounted at a certain interest rate, which is provided for in the contract drawn up earlier.

The gross leased investment represents the minimum lease payments received by the lessor at the time of a finance lease and any non-guaranteed residual value due to the lessor.

Net investments and savings are a set of funds carried out by economic entities or groups of persons. The sources of net investment are savings, which affect the investment process, which depends on many factors:

Expected rate of return;

Consideration of alternative possibilities;

· Level interest rate;

The level of taxation;

The rate of inflation.

Thus, the equality of the volumes of net investment and savings has an impact, first of all, on aggregate offers and demand, which is not an easy task. This is due to the fact that investment is a function of interest. Savings is a function of income.

The effective functioning of any enterprise depends on the correct investment policy of the management. When developing the right course, it is important to confidently operate with the concepts of gross and net investments, to understand how they affect the state of the organization and the level of trust.

In the article, we will consider what gross and net investments are, what are their differences, from what sources they are formed and for what needs they are directed, and we will also find out what the calculated values of these indicators signal.

The concept of investment

Before talking about such concepts as gross and net investments, it is necessary to define the very concept of "investment". So, investments are monetary or material investments with the aim of making a profit or other benefit. The objects of investment can be both industrial and represented by organizations of healthcare, education, and culture.

The role of investment

AT modern economy difficult to overestimate. They influence all spheres of society by regulating and redistributing benefits. Let's consider a simple example: financial investments in a manufacturing enterprise made it possible to open a new workshop. In order to build it and lay the infrastructure, construction organizations were attracted, which allowed the latter to earn money. The new workshop needs workers, so the number of jobs has increased, the unemployment rate in the country has decreased and the well-being of the population has increased. Due to the opening of the workshop, the volume of production increased, therefore, the profit of the business entity also increased.

The workers of the new shop got the opportunity to spend the money they earned on education, culture, or invested it in real estate. This example is rather arbitrary, but clearly reflects the meaning investment activity for the country's economy as a whole. Of course, it is much easier to assess the effectiveness of investments in the production sector, so further we will consider investments in the microeconomic sense, that is, from the point of view of a single production enterprise.

Investment structure

It is customary to distinguish between real and financial investments. To financial investments includes the acquisition valuable papers issued by the state or other economic entity. Real investments include investments in fixed and current assets, new construction, repair of production assets, acquisition of real estate and land plots, as well as investments in intangible assets: licenses, patents, research, staff development. Thus, we smoothly approached gross investment, which is a category of real investment.

Gross investment

When it comes to gross investments, it is primarily real ones that are meant, but financial ones can also be classified as gross if the investor purchases shares of the enterprise during their initial issue. The funds received from the initial issue of securities are primarily used to expand production assets and intangible assets: the purchase of equipment, the lease of premises, the acquisition of a license, etc. Gross investments are investments in fixed production assets and working capital.

Composition of gross investments

Gross investments are primarily directed to the maintenance and expansion of fixed capital, which includes:

acquisition, renewal and repair of equipment;
acquisition and repair of industrial premises;
capital construction, including housing;
modernization of the production process.

Also, gross investment is a source of increasing working capital. First of all, we are talking about the stocks of raw materials and materials that will be needed when expanding production, for example, after the opening of a new workshop.

An important component of gross investment is the funds spent on the acquisition of intangible assets:

licenses and patents;
inventions and know-how;
brands and trademarks;
rights to land;
rights to mineral deposits;
acquisition of software and software products.

The company's intangible assets also include human capital, so gross investments can be directed to staff training, health insurance. Such investments contribute to the growth of the company's prestige in the market and indirectly affect the value of its shares.

Indicator value and calculation

Based on the directions of investments, gross investments can be divided into two groups:

investments that go to repair and maintain existing production assets,
investments directed to the expansion of capacities.

The first group is depreciation. To accumulate this type of investment, depreciation funds are created. The volume of the fund is determined using the depreciation coefficient, which is calculated on the basis of the life of a particular type of equipment or building until it is completely worn out. The value of the asset is transferred by the finished product, and after its sale, the pledged amounts are accumulated in the sinking fund.

The second group is represented by investments aimed at increasing capital, they are called net. These include all types of investments mentioned above, except for depreciation.

The formula for calculating gross investment is as follows:

VI \u003d A + CHI, where

VI - gross investments;

A - depreciation;

CHI is pure investment.

The ratio of the value of gross investments and the amount of depreciation indicates at what stage of development the economic entity is. The growth phase is characterized by the excess of gross investment over depreciation. If the situation is reversed, this is an indicator of a lack of productive capacity.

Gross investment in the macroeconomic system can also be calculated on the basis of gross domestic product, which characterizes the total volume of production of goods and services in the country:

VI \u003d GDP - Rp - Rg - Rche, where

GDP - gross domestic product;

Rp - consumer spending;

Рг - state expenses;

Rche - the cost of net exports.

Sources of gross investment

The sources of formation of the total volume of gross investments include:

own funds enterprises in the form of depreciation and investment funds;
investments of third-party investors: financial (acquisition of securities: shares, bonds, shares, etc.) and real investments in tangible and intangible assets;
loans from banks, leasing companies and microfinance organizations;
subsidies from the state budget.

Many businesses are looking to outside investors for their development. This is especially true when implementing investment projects. As a rule, the risks in them are quite high, and the company tries to diversify them by reducing the volume of its own investments and increasing third-party investments. The organization retains full control over the project.

Public funds are involved in the implementation of major projects that are important not only for a particular business entity, but also for the country as a whole. Infrastructure projects often serve as an example of public-private partnership. There are also cases of state investment of rights to land plots and mineral deposits. Situations where entire state-owned enterprises act as investments deserve special mention.

Net investment

Net investment is the part of gross investment that goes to expand the production potential of the enterprise and increase capital. Net investment is equal to the difference between gross investment and depreciation.

The indicator of net investments is important in assessing the state of the enterprise. A positive value of the indicator means that the company is in the phase of growth, develops and expands. Zero value speaks of a simple A, a negative value signals that the enterprise does not even have enough funds to update production assets, the organization is in a state of crisis and has real risk go bankrupt.

Sources

Sources of net investments are similar to gross ones and are divided into own funds of the enterprise, net private investments and borrowed funds of banks, leasing and microfinance organizations. The main internal source is profit from the sale of goods and services and authorized capital. In addition, internal resources include profit from the sale of unnecessary, already depreciated property. The indicator of the volume of net investments from internal sources is an indicator of the stability of the organization. It affects the level of confidence in the enterprise of third-party investors and credit institutions.

Significance for the economy

Net investment refers to real investment, the purpose of which is to expand production and ultimately increase profits. The net present value of investments affects not only the stability of a particular enterprise, but also affects related industries in the country: from construction to healthcare, education and culture. Thus, investment activity contributes to the development of the country's economy as a whole and the growth of the welfare of the population.

The decline in net investment signals the beginning of a recession in the economy and the approach of a crisis. The level of investor confidence is declining, and they are shifting investments from real to financial, which generally aggravates the situation. Thus, the work of bringing the country out of the crisis falls on the shoulders of the state.

Investments play an important role in ensuring the stable development of both a particular organization and the country's economy as a whole. Gross investments refer to real investments and are directed to the reproduction and increase of fixed and current assets, as well as intangible assets. Gross investment consists of depreciation and net investment. Net investment is that part of the investment that goes to the expansion and modernization of production, the acquisition of patents and licenses, research and staff development. The volume of net investments is an indicator of the company's stability and affects the level of confidence of external investors and credit institutions.

3. Gross and net investment

At the micro level, investment plays a very important role. They are necessary to ensure the normal functioning of the enterprise, stable financial condition and increase the profit of the business entity.

A significant part of the investments is directed to the socio-cultural sphere, to the branches of science, culture, education, healthcare, physical culture and sports, computer science, and security. environment, for the construction of new facilities in these industries, the improvement of the equipment and technologies used in them, and the implementation of innovations. There are investments in people and human capital. This is an investment primarily in education and health care, in the creation of funds that ensure the development and spiritual improvement of the individual, the strengthening of people's health, and the extension of life.

The effectiveness of the use of investments largely depends on their structure.

The structure of investments is understood as their composition by types, by direction of use, by sources of financing, etc.

Profitability is the most important structure-forming criterion that determines the priority of investments.

Non-state sources of investment are aimed at profitable industries with a fast capital turnover. At the same time, sectors of the economy with low profitability of invested funds remain not fully invested.

Overinvestment leads to inflation, while underinvestment leads to deflation.

These extremes economic policy regulated by an effective tax strategy, public spending, monetary and financial and budgetary measures carried out by the government.

In the system of reproduction, regardless of its social form, investments play the most important role in the renewal and increase of productive resources, and, consequently, in ensuring certain rates of economic growth.

In the representation of social reproduction as a system of production, exchange and consumption, investments relate to the first stage of production and constitute the material basis for its development.

From the MBA book in 10 days. The most important program of the world's leading business schools author Silbiger Stephen

Investments Risk and return What do I gain by owning a large or small share in a company or other enterprise? To make an investment decision, you need to ask yourself the double question: “How much income can the enterprise bring and how risky is it?” Main

From the book Investments author Maltseva Yulia Nikolaevna

4. Financial investment Financial investment is the investment of capital in various financial instruments investments, mainly securities, in order to achieve the set goals, both strategic and tactical

From the book Investments author Maltseva Yulia Nikolaevna

5. Real investments authorized capital, first issuance of new shares, followed by real investment. Thus, financial investments play an important role in

From the book Investments author Maltseva Yulia Nikolaevna

43. Pure and speculative risks Depending on the event, risks can be divided into two large groups: pure and speculative. Pure risks mean getting a negative or zero result. Speculative risks mean getting both positive and

From the book Securities - it's almost easy! author Zakaryan Ivan Ovanesovich

Collective Investments The average person does not want to know whether the market is bearish or bullish. He wants to be told which shares to buy or sell. He wants to win without risk. He doesn't want to work. He doesn't even want to think. Even counting money

From the book Finance of Organizations. cheat sheets author Zaritsky Alexander Evgenievich

55. Real investment Russian law defines real investment as “ capital investments". This concept is explored in federal law“On investment activity” as “investment in fixed capital (fixed assets), including

From the book Think Like a Millionaire author Belov Nikolay Vladimirovich

Perpetual investment You need to invest wisely, clearly setting yourself a goal. Big earnings cannot be the goal of investment. The main thing here is to agree on the priority, cost and duration of investments. This is the only way to determine the tools for

From the book The Religion of Money. Spiritual and religious foundations of capitalism. author Katasonov Valentin Yurievich

"Investment in power" A fairly common point of view is that there is no particular difference between Judaism and Protestantism (especially its forms such as Calvinism and Puritanism). In both religions there is an idea of "chosenness". In both religions

From the book Financial Crisis the author Blunt Maxim

INVESTMENT FASHION More and more Russian citizens are discovering the market collective investment. The main thing is that the correction of the stock market does not kill the desire to invest in investors. At the time of this writing, the Russian stock market was in a state close to

From the book How the West Perished. 50 years of economic folly and harsh choices ahead by Moyo Dambis

Investment As well as private consumption, private sector investment in the US rose from $1.389 trillion to $2.136 trillion between 1997 and 2008. On closer inspection, it becomes clear that these sensational figures misrepresent reality;

From the book Human Action. Treatise on economic theory author Mises Ludwig von

5. Gross wage rates and net wage rates In the labor market, an employer buys and receives in exchange for wages a certain action which he values according to its market price. For the price of a certain quantity

From the book Steep Dive [America and the New Economic Order after the Global Crisis] author Stiglitz Joseph Eugene

Investments It would make sense to give priority to those investments that work to strengthen our future, especially investments in labor and technical resources that provide high returns. Due to the reduction of financial support for private universities

From the book Capital. Volume two author Marx Karl

I. NET COST OF DISPOSAL

From the book Lady is beyond competition, or all paths lead to success author Rubshtein Nina Valentinovna

Investments The question "Where to get the money?" in our time is no less relevant than "Who is to blame?" and “What to do?” The easiest thing to do is to make money. And wisely distribute them. To do this, you need to prioritize your costs. If, for example,

From the book Why Russia is not America author Parshev Andrey Petrovich

From the book Social Entrepreneurship. Mission is to make the world a better place author Lyons Thomas

Investing in publicly traded securities and private equity Active ownership strategies As a strategic owner and trustee of publicly traded securities holdings, an investor can influence corporate behavior through voting on