Economy and Business Votes

Posts Tagged ‘investment’

The rate of return on investment (ROI for short) is a financial indicator that measures the profitability of an investment, the rate of change experienced by the amount of an investment (or capital) to become utilities ( or benefits).

The index formula for return on investment is:
ROI = ((Utilities – Investment) / Investment) x 100

For example, if the total investment (investment) is 3000, and the total profits of 4000 obtained by applying the formula for ROI:

ROI = ((4000 – 3000) / 3000) x 100

It gives us a ROI of 33.3%, ie, the investment has a profitability of 33%.

The ROI we can use to evaluate a going concern, if the ROI is less than or equal to zero, means that investors are losing money, and the higher the ROI, means that the more efficient the company to use the capital to generate profits.

But mainly, the ROI is used when evaluating an investment project if the ROI is less than or equal to zero, it means the project or future business is not profitable (feasible) and the higher the ROI, means that a greater percentage of capital will be recovered to be invested in the project.

Also, the ROI allows us to compare different investment projects, one that has a higher ROI will be the most profitable and therefore the most attractive.

Finally, we note that the ROI, mainly due to its simplicity, is one of the main indicators used in evaluating an investment project, but keep in mind that this indicator does not take into account the value of money time, so when evaluating a project, it is always advisable to use along with other financial indicators such as NPV and IRR.

The definition of profitability basically tells us is the result obtained after carrying out any production process, this being positive when the company earns money on the transaction, or negative when the transaction is generating losses of money.

Can you think of the definition of profitability – return definition as the ability of an element to generate profits, ie a product or business is profitable if it generates far more revenue than expenses, while maintaining a positive balance.

Now if we want to clarify a little more definition of profitability – return definition, we can say that profitability is basically an index that measures the relationship between earnings or profits and the investment made to obtain such benefits.

Obviously, the definition of profitability  in this measure will indicate whether a particular item or product is generating profits or losses, then help develop strategies to be implemented to exploit this valuable information.

However, to this extent the definition of profitability – return definition allows us as a company significantly strengthen our products, allowing us to achieve a very high quality, achieving high customer satisfaction by the client, which simply means great benefits for us . Read the rest of this entry »

In the investment world, there are 2 methods commonly used as a tool, namely fundamental analysis (FA) and technical analysis (FA). FA to assess stocks based on fundamental condition of the company itself, therefore, FA is more suitable for long term investment. A true FA usually does not merely analyze financial data, but also came to the targeted company, speak with management and owners, saw the vision, mission and strategic plan forward, and so forth. Not infrequently a true FA to fly all over the world to extract information directly from the company.

Meanwhile, the TA to assess the stock price based on the reflection of prices in the past with reading the sentiment, trends, and projections that may occur in the future. The TA will help you memerkirakan direction of price movement, making the boundaries of movement in certain circumstances, and indicate the target direction and its risks. TA is typically done with the help of software applications and many exploit graph (chart). Due to the nature and character, TA is more suitable for trading (speculation) in the short term or protection (hedging).

Most of the people we never heard the word “stock” but often that still leaves many questions in his mind. For example, if investment in shares can be done by individuals? Or, if my income is less than $ 5 hundred per month, can I invest in stocks? Or, if I want to invest, what stage and who should I contact? Well, because there are some emails that ask similar questions, then I might as well write it here.

As we all know, stocks are securities which shows the ownership of a company. You buy a stock means you buy part ownership of the company. During the company’s operations and recorded a gain, you are also entitled to share in the form of dividends. You can also take advantage of the rising price of these shares from time to time

Profitability is the value and investment made to achieve it. Investors always measure the profitability of a company you have invested to decide whether to reinvest or withdraw.

A company is not profitable only because of profit. For it is, should produce higher revenues than the costs. Financial assets have a functional extra character, and you are done with surplus resources from the company and its operative management and are outside the regular business of the company.

Profitability is one of the features that the company typically locates its financial investments, but also need to have some assurance that will be able to recover the money invested, and above all that you can do at the time you make missing.

How do you calculate profitability?

The formula used to calculate the payoff is this:
Total Return = (Final value – Initial value / baseline) x 100

For example:
If last year was spent 1,000 euros a share price of the investment fund (NAV) of 10 euros. If the current asset value is 13 euros, the profitability of the fund in a given period of time will be:

(13 – 10/10) x 100 = 0.3 = 30% Total Return Fund

But it is very important to note that this cost should be compared with that of other funds that are in the market where the fund operates and with the market benchmark.

Experts recommend investing in different types of financial products to reduce risk as a type of investment tends to go well when another does not. So have the money in two types of background can help you get a combined benefit of both. It is also essential to know what belongs investor profile: conservative, moderate or aggressive depending on the degree of risk taking investment.

In addition to profitability, we must take into account the assumed risk to investment and the ability to convert assets into cash. Before investing, consider the current financial situation and any compromise that may arise in the future.

Investors did not opt for high risk investments without having a steady income and insurance and a certain amount of money available if investments drop.

There are various alternatives for the company to invest in their idle resources, such as short-term credits granted by the company to individuals or other companies, the charges in the short term, stock, treasury bills, bonds and all with the intent to sell in a period less than one year.

The more risk, more performance and vice versa if we want greater security for the invested capital, the risk is lower. Nor is it desirable to invest in something that is not understood.