Investments in fixed assets: types and sources

Before getting acquainted with what constitutes investment in fixed assets, it is worth considering both concepts separately. This will help you understand them in more detail and avoid mistakes in the future.

The concept of investment and fixed capital

Investments are long-term investments of capital in objects of various types of activity to generate income in the future.

Fixed capital is the property of enterprises, which is expressed in monetary terms. It includes the material values ​​of the organization, as well as financial and intangible assets.

The concept of investment in fixed capital

Investments in fixed capital are investments that will contribute to the acquisition, creation, and expansion of the company's fixed assets. The result of this process may be the construction of new facilities and the modernization of equipment, the purchase of the necessary vehicles and tools. In addition, other actions are carried out aimed at the development of a particular subject of the economy.

To date, such investments occupy the predominant part of the total number of investments of each organization. It should be noted that the volume of investment in fixed assets is not constant. This indicator can change quite often depending on the needs of the enterprise.

Types of investments considered

Considering the spheres of financial investment, the following types of investments are distinguished:

• construction;
• farming;
• forestry and hunting;
• fisheries;
• industry;
• trade;
• area of ​​restaurant and hotel business;
• communications and transport;
• repair of equipment and household products;
• trade and lease of real estate objects;
• health protection;
• area of ​​public administration;
• education;
• financial activities;
• provision of individual and communal services;
• culture and sports.

In these areas of activity, investments in fixed assets are steadily traced. It should be borne in mind that their indicators change depending on the effectiveness. It is necessary to familiarize yourself with the conditions that are relevant to ensure its sufficient level.

Factors that affect the effectiveness of investments

Various factors affect the performance of investments in fixed capital, which affects the functioning of the enterprise. At the national level they can be:

• the expediency of the economic policy pursued in the country;
• social situation in the country;
• indicators of the perfection of taxation systems;
• the presence and essence of investment risks in a particular state for capital investors;
• conditions that are created to attract capital from abroad.

It is necessary to take into account the condition: the financing of investments in fixed capital may decrease, which will be the result of insufficient efficiency of the investment policy in the state. One of the main factors that can affect this is the degree of inflation in the country.

When individual regions of the state and certain enterprises are considered, the volume of investments may be affected by:

• the level of application of production fixed assets and capacity;
• competitiveness of distributed products;
• quality and efficiency of investment projects implemented by organizations;
• rationality in the process of handling enterprise resources.

Given these factors, it is possible to increase the amount of investment in fixed assets.

Sources of contributions to fixed capital

By separating the factors that affect investment in fixed assets, the accounting account is the company. It should be noted that the sources of financial flows are the funds belonging to the enterprise, software products, trademarks, patents, as well as assets of land funds.

Fixed capital investment can also come from borrowed assets through the issuance of company shares. They have a special influence on the investment structure. It should also be borne in mind that cash contributions can be allocated by industrial fund groups, as well as joint-stock companies and holding companies. Such investments are made on an irrevocable basis and they can be called one of the most effective sources of economic development of organizations and the economy as a whole.

What is needed to attract investment?

No one will engage in charity and invest in activities without having a benefit. For this reason, a special investment agreement is drawn up, which indicates the object, the obligations of both parties, their responsibilities and terms. On its basis, the investor receives the right to his share of the profits.

In such a partnership, the risk exists only for the investor, because he cannot be completely sure of the profitability of entrepreneurial activity. Moreover, if the company does not receive income, it will not have to pay anything to the investor.

Investors will also not make deposits without special reasons. To raise funds, you need to draw up a competent business plan. It should display and justify the profitability of investments. It is required to pre-think the conditions under which the company will agree to invest. In addition, it is worth considering the details present in this process. Otherwise, the entrepreneur may find himself in an uncertain situation.

It is not difficult to attract investments in fixed capital, and besides, this is a beneficial interaction for both participants in the transaction. For this reason, it is also easy to find an investor for a really profitable business.