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Economy of the enterprise - Pokropivny SF

8.7. Investment projects of enterprises and organizations

Significant investment resources are actually spent, usually after the development and approval of a specific investment project of an enterprise or organization, which is understood as a certain set of documents with respect to the content and conditions for the implementation of appropriate measures to achieve this goal (development of technical and technical basis, start of new products, implementation of any new methods Or forms of organization of activities, etc.). At the same time, the implementation of activities envisaged by the investment project must necessarily ensure a positive economic or social effect.

Cycle, phrases and stages of justifying an investment portfolio. Development and implementation of an investment project of production orientation cover a certain period of time from the emergence of relevant ideas to their practical implementation (introduction of a new production facility, the beginning of the production of a new product, the implementation of organizational or other innovation).

This period of time is called the cycle of the investment project (investment cycle) . It includes three phases: 1) pre-investment (preliminary research before the final investment decision); 2) the actual investment (design, contracting, construction or arrangement of premises, training of personnel); 3) production (commissioning, organization of economic activities of the enterprise or organization after the practical implementation of the project).

Pre-investment phase of the investment project, as a rule, consists of three stages: analytical, project and evaluation.

• The first (analytical) stage provides for the compilation of information on the need to invest in a particular facility, the potential of potential investors, the opportunities for ensuring the activities of the facility by properly qualified personnel, and the availability of their own material resources. The main goal of this stage is to draw attention to the emerging new investment idea.
• The second (project) stage covers: a) preliminary justification; B) auxiliary (functional) studies; C) feasibility study of the investment project. At the stage of auxiliary (functional) research, detailed study of specific aspects of the project is carried out. These studies for large-scale investment proposals are carried out necessarily in such areas:
• Forecasting the demand for manufactured goods, taking into account the expected penetration of the market;
• Identification of the measure of availability of the necessary raw materials and materials, conducting the necessary laboratory and experimental tests;
• The study of the location of production (primarily for projects where transportation costs can be a determining factor);
• Assessment of the economic and technogenic impact of the production facility (activity) on the environment;
• Research of optimum scales of production (activity) taking into account alternative technologies, resources, production costs and prices for products (services);
• The choice of a set of equipment taking into account the capabilities of suppliers and the volume of investment resources on an alternative basis.

The stage of the feasibility study of the investment project, when a decision is made on the availability of technical, environmental, economic and commercial prerequisites for its practical implementation, is carried out according to the scheme shown in Table. 8.4.

Table 8.4.

TECHNO-ECONOMIC SUBSTANTIATION (FEASIBILITY) OF THE INVESTMENT PROJECT

• At the third (estimated) stage of the pre-investment phase of the project, legal (physical) persons who agree to support the idea of ​​the project as a whole and all of its individual aspects (technical, organizational, financial) make the final decision on investing a new project.

The investment phase of the investment project cycle usually covers specific types of work (Figure 8.9).

After carrying out the necessary research before the investment decision is made, a business plan is drawn up : a document that is as compact as possible in content and standard in form, which describes the main direction of the investment project and its main technical and financial and economic parameters. The number of sections and details of the business plan of the investment project depend on its scale and the specific field of activity.

Such a business plan is formed as the basis for financial support from potential investors; For them it is primarily intended. It is also used by commercial banks to create their own credit and investment portfolio and subsequent lending to entrepreneurs, enterprises and organizations that have developed long-term business plans for investment projects.

Fig. 8.9. Types of work (constituent elements) investment phase of the project investment cycle cycle

Financial plan and evaluation of the effectiveness of the investment project. The most important component of the business plan and the investment project as a whole is the financial plan , which is drawn up for several years (3-5) according to a certain standard scheme (Figure 8.10).

The forecasting of sales (sale) volumes of products is carried out in the form of a table according to the following scheme: 1) the name of the product; 2) the physical volume of sales; 3) the unit selling price; 4) the amount of sales without VAT and excise (page 3 x page 2); 5) the volume of VAT and excise; 6) sales proceeds with VAT and excise (page 4 + p. 5). At the same time, the volume and amount of sales are projected separately for the domestic and foreign markets. In the process of forecasting sales volumes, one should also take into account: the time of sale; Delay of payments; Part of the product, which can be sold on credit and with advance payment. In the case of applying the discount system, the amount of sales is projected taking into account all discounts.

Investment costs of the project include investments that ensure its preparation and implementation. Investment costs can be divided into capital and current. Capital costs include costs for: 1) pre-investment studies and preparatory work; 2) lease and development of a land plot; 3) buildings and structures, construction and installation works; 4) infrastructure; 5) technology and equipment; 6) commissioning works. The current includes costs for the training of operational personnel, overheads and working capital.

Fig. 8.10. The main sections of the financial plan of the investment project of the enterprise (organization, entrepreneur)

The capital raising plan provides for specific sources of project financing: internal - own funds, raised funds, government subsidies, commercial bank loans; External - loans from international financial organizations, loans from foreign banks, technical assistance (grants), portfolio foreign investments, direct foreign investment. Under "Own funds" and "Foreign direct investment" investment costs are reimbursed at the expense of cash, as well as tangible and intangible assets of investors. If the sources of financing are borrowed funds and portfolio foreign investments, this means that the initiators of the investment project attract funds from other investors (legal or natural persons) by selling shares and other securities. The amount of financial resources offered by the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, and other similar organizations is fixed in the article "Credits of International Financial Organizations". At the same time, the amounts of the total need for investment costs and the amount of their specific financing by different sources must be the same.
The purpose of calculating the current project costs is to determine the total current costs of production. It is recommended to calculate direct costs per unit of output, and then - for the entire volume of products sold. Direct costs per unit of production cover material and labor costs: a) raw materials and materials, components and semi-finished products; fuel; energy; Work on production services; Circulating waste - are excluded; B) basic staff salaries; The deductions to the state social insurance, to the pension fund, to the State Employment Assistance Fund; Additional payments from the wage fund. To indirect costs for the total volume of products sold include:

• Amortization of fixed assets and intangible assets;
• Rent payments (payments for compulsory insurance of property and workers, payments for insurance of foreign investors and foreign trade resources, land fees, charges for emissions of pollutants and waste disposal within the established minimums, mandatory contributions to extra-budgetary funds);
• Marketing costs (complex market research, advertising, certification and marketing of products, expert fees, exhibitions, fairs, business negotiations, etc.);
• Administrative costs (payment for communication services and banks, auditing, repair and utility and utilities, office, presentation and office expenses, business trips);
• Payment of interest on loans from banks;
• Non-productive expenses;
• Other operating costs.

Therefore, the total amount of current costs for production and marketing of products includes direct material and labor costs, as well as operating (indirect) costs.

The balance of cash flows is inherently the results of settlements on the sections of the financial plan; It characterizes the movement of cash flows, provides for possible "bottlenecks" in paying debts and other monetary obligations, reflects the sources of financing of the investment project. It is made according to this scheme: 1) cash at the beginning of the year; 2) receipt of funds; 3) cash in cash - total; 4) cash payments to outside organizations (taxes, payments for loans, payment of dividends, repayment of debts, etc.); 5) the total amount of cash payments to a party; 6) cash at the end of the year. Simultaneously with the consolidated balance of cash flows, a profit plan should be formed to determine the amount of taxable profit.

The projected balance sheet is made at the end of each year of the project to identify bottlenecks. The method of forecasting is usually based on an analytical assessment, based on basic accounting entries, cash flows, other assets, changes in liabilities.

The main generally recognized indicators of the effectiveness of the investment project are:

• Net present value ( NPV ), which reflects the absolute value of the economic effect from the sale of investments:

NPR = DP - IS, (8.15)

Where DP is the present (discounted future) value of cash flow;

IP - the amount of investment funds for the project;

• The index of profitability (ID), which characterizes the ratio of discounted cash flow (DP1) and investment resources (IP):

ID = ДП1 / ИС, (8.16)

• Payback period (TOT), i.e., the period of return of advanced investment funds, based on the amount of cash flow with bringing its absolute value to the present value (using a discount multiplier). To calculate it, you can use the formula:

, (8.17)

Where - The average annual value of cash flow for a certain period.

For a more accurate definition of this indicator, it is advisable to use such a time period (the number of months, years) when the investment costs are equal in absolute terms to the cash flow (by the growing total).

Questions for self-study in depth

• Essential characteristics and structure of investments.
• Methods for determining the required volume and sources of financing of capital investments in the enterprise.
• Characteristics and role of certain types of securities in financing the development of production and in the economic activities of various business entities.
• Organizational and legal support and mechanism of state regulation of securities issue and circulation.
• The objective need and effectiveness of attracting foreign investment for the development of manufacturing enterprises.
• Methodical bases of definition of efficiency of industrial investments in the conditions of market mutual relations.
• Discount rate (capitalization): essential characteristic, purpose of application, method of determination.
• Features of determining the effectiveness of capital investments at individual stages of the investment-reproduction cycle.
• Possible methodological approaches to assessing the effectiveness of issuing and selling the main types of securities.
• The main factors of increasing the efficiency of the formation and use of industrial investment.
• Organizational and economic levers of the most effective formation and realization of financial investments (securities).
• Substantial characteristic and economic justification of investment projects of different economic entities.