INVESTMENT SELECTION CRITERIA

Three criteria for assessing the relevance of an investment

The net present value

The NPV expresses the sum of the initial disbursement and the corresponding receipts corresponding to the expected revenues, taking into account inflation, exchange rate changes, etc.

The profitability index

PI is the ratio between the value of operating cash flows and the amount initially invested. If its value is greater than one, then the project is profitable.

The internal rate of return

The IRR is the discount rate that cancels the NPV of the investment. If a project's IRR is higher than the discount rate used, it can be said to be profitable.

FINANCIAL INVESTMENT

A distinction is made between tangible and intangible investments.

WHAT IS A FINANCIAL INVESTMENT?

First element of company valuation

A financial investment is an expense that is intended to increase the wealth of the person or business that makes it. The objective of financial investments is to seek a quantifiable positive long-term effect.

A company invests in order to increase its productivity, improve its brand image and retain new customers, save time, increase profits by lowering costs and make savings.

Obviously, these investments require sustainable financial resources. Thankfully, websites like bank4pro.co.uk for example, are here to help investers choose the means of financing best suited to their projects.

WHAT IS THE ASSET VALUE OF THE COMPANY?

First element of the valuation of the company

The company's asset value is the sum of its assets minus its liabilities. It is used to determine the net book assets. It involves valuing each asset separately and making an algebraic sum of them.

This method can be useful in determining the liquidation value of the business but has the limitation that it rarely corresponds to a fair economic value of the business. Discover more on financebusinessnews.net.

BUSINESS VALUATION

Determining the fair market value of a business.

ASSET MANAGEMENT

It is a process that evaluates the assets of a company or individual in order to optimize their use. It's not just about investing in real estate or the stock market, it's also about organizing your assets to serve your goals and help you deal with life's unexpected events.

Your assets deserve someone you can trust. That's why a wealth management advisor will work with you to develop a detailed plan to help you achieve your short-, medium- and long-term wealth objectives.