How to calculate capital investments

Any investment in business must be justified and bring benefit to the investor. Capital investments include the costs of acquiring or creating new fixed assets and the reconstruction of existing ones.

There are two coefficients for which they determine how effective capital investments are common and comparative. General economic efficiency is the ratio of the alleged result to its receipt. Calculation of efficiency must be made at each stage of planning. When calculating capital investments, the term of their payback is calculated.

Calculate the effectiveness of investments in the formula E \u003d n / k. E is the effectiveness of capital investments, P - profits for the period under review, to - capital investments.

The formula varies slightly when calculating large contributions in the manufacturing industry. In this case, it looks like this: E \u003d (C - C) / K, where E is the efficiency of the enterprise, C is the price of products for the year, without taking into account the taxes, C - the cost of production goods.

To calculate the effectiveness of investment in the trade sector, the formula E \u003d (H - and) / K is used. H is the sum of trade premises, and the total amount of costs in circulation.

The payback period of capital investments is calculated by special formulas, depending on the scope of activity. T \u003d K / P is the standard formula, T \u003d K / (C - C) - for the production sphere, T \u003d K / (H - and) - for the trading sphere.

Cleaning capital investments, compare their effectiveness with similar data for the previous period or regulatory indicators. The project can be considered profitable if the performance of efficiency calculations is not lower than the regulatory.