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Investment attractiveness of industry enterprises... methodological aspects
Svetlana Romanova, No. 4-2010
The result of any chosen method of investing investment funds should be an increase in the efficiency of the enterprise.
Due to the fact that the main purpose of investment activity is to ensure the implementation of the most effective forms of capital investment aimed at expanding the economic potential of the enterprise, each economic entity should pay special attention to its investment attractiveness.
Let 's define the conceptsBefore proceeding to the analysis of the investment attractiveness of medical industry enterprises, the methodology and algorithm for building a rating on this basis, it is necessary to consider in detail and define concepts that are very closely related to these issues.
It is better to do this right away in order to avoid misunderstanding or ambiguous understanding of the stated principled positions in the future. Let's understand the concepts of investment, investment activity, investors and their classification, investment attractiveness and financial condition of medical industry enterprises.
Investments and investment activitiesThe investment attractiveness of an enterprise, according to experts, is determined by the expediency of investing temporarily available funds in it.
What is "investment" and "investment activity"? These concepts are given in the Federal Law "On Investment Activity in the RSFSR" No. 1488-1. Investments are cash, targeted bank deposits, shares, shares and other securities, technologies, machinery, equipment, loans, any other property or property rights, intellectual property invested in objects of entrepreneurial and other types of activity in order to generate profit (income) and achieve a positive social effect. Investment activity is an investment, or investment, and a set of practical actions for the implementation of investments.
Real and financial investments are allocated for the objects of investment. Real investments are a set of investments in real economic assets: material resources (elements of physical capital, other tangible assets) and intangible assets (scientific and technical, intellectual products, etc.). The most important component of real investments are investments made in the form of capital investments, which are also called capital–forming investments. Financial investments include investments in various financial assets – securities, shares and equity interests, bank deposits, etc.
According to the purpose of investment, direct and portfolio (indirect) investments are distinguished. Direct investments act as investments in the authorized capitals of enterprises in order to establish direct control and management of the object of investment. They are aimed at expanding the sphere of influence, ensuring future financial interests, and not just generating income. Portfolio investments are funds invested in economic assets for the purpose of generating income (in the form of an increase in the market value of investment objects, dividends, interest, and other cash payments) and risk diversification. Portfolio investments are usually investments in the acquisition of securities and other assets owned by various issuers.
Real and financial investments should not be considered as analogous to direct and portfolio investments, respectively, and at the same time, direct investments should be understood as direct investment in production, and portfolio investments should be understood as the purchase of securities, i.e., the classification criterion should be the characteristic of the object of investment. Real investments, in addition to investments in physical elements of productive capital, include investments in other forms of real assets, and financial investments cover investments not only in securities, but also in other financial instruments. In addition, it is hardly legitimate to attribute only direct investments to production investments, since part of portfolio investments (investments in securities of manufacturing enterprises during their initial placement) is also intended to attract investors' funds to production. Investments are also classified by terms (short-term, medium-term and long-term), forms of ownership of investment resources (private, public, foreign and joint), regions, industries, risks (aggressive, moderate and conservative), and other characteristics.
Investors and main types of financingInvestors are subjects of investment activity who invest their own, borrowed or borrowed funds in the form of investments and ensure their targeted use.
Individuals and legal entities, municipalities, states and international organizations can act as investors.
Among the main types of financing of an enterprise from external sources, it is necessary to allocate investment in the company's share capital and the provision of borrowed funds. The main forms of attracting equity investments are investments of financial investors and strategic investment. Investments of financial investors are the acquisition by an external professional investor, as a rule, of a blocking, but not a controlling stake in the company, followed by the sale of this package in 3-5 years (mainly venture and mutual funds) or the placement of shares of the company on the securities market to a wide range of investors (in this case, it can be companies of any field of activity or individuals). In this case, the investor receives the main income by selling his block of shares (i.e. by exiting the business). In this regard, it is advisable to attract investments from financial investors for the development of the enterprise: modernization or expansion of production, growth in sales, increase in efficiency, ultimately leading to an increase in the value of the company and, accordingly, the capital invested by the investor.
Strategic investment is the acquisition by an investor of a large (up to a controlling) stake in a company, which usually involves a long-term or permanent presence of the investor among the owners of the company. Often, the final stage of strategic investment is the acquisition of a company or its merger with an investor company. The leading enterprises of the industry and large associations of enterprises – industrial groups - usually act as strategic investors. Their main goal is to increase the efficiency of their own business and gain access to new resources and technologies.
The main instruments for investing in the form of providing borrowed funds are loans (banking, trading), bond loans and leasing schemes, which can be attributed to investments in the form of borrowed funds with some reservations, since leasing is essentially a form of property transfer for rent. However, in the form of income received by the lessor (in the form of interest), leasing is close to bank loans. The volume of attracted financing can be from several tens of thousands (loans) to tens of millions of dollars. The terms of financing can also range from several months to several years. With this form of financing, the main goal of the investor is to receive interest income on the invested capital at a given level of risk. Therefore, this group of investors is interested in the further development of the enterprise in terms of its ability to fulfill its obligations to pay interest and repay the principal amount of the debt.
Thus, all investors can be divided into two groups: creditors interested in receiving current income in the form of interest, and business participants (owners of a stake in the business) interested in receiving income from the growth of the company's value.
The investment attractiveness of an enterprise for each of the groups of investors is determined by the level of income that an investor can receive and minimal risks when investing funds. In accordance with this, investors determine the requirements imposed on enterprises when investing. At the same time, it is obvious that the main requirement for creditor investors is confirmation of the ability of the enterprise to fulfill its obligations to return capital and pay interest, and for investors involved in the business - confirmation of the ability to master investments and increase the value of the investor's stake.
Criteria and algorithm of rating constructionIn world and domestic practice, to determine the investment attractiveness of an enterprise, a method is used to determine its condition according to accounting financial statements, i.e. the financial condition of the enterprise.
The financial condition, in turn, is a set of indicators reflecting the availability, placement and use of financial resources. The financial results and financial condition of the company are the basis of its investment attractiveness.
All subjects of market relations: owners, investors, banks, exchanges, suppliers, buyers, customers, advertising agencies, etc., are interested in reliable information and an unambiguous assessment of the reliability of their partners, their investment attractiveness and competitiveness. This assessment can be obtained using various research methods, which include the calculation of a group of indicators, criteria, the choice of which depends on the goals set by the investor.
Each partner of the company: shareholders, banks, tax authorities, etc., has its own criterion for assessing the economic feasibility of establishing or continuing relationships. The answer to the question whether the company is capable of paying taxes is important to the tax authority. In this regard, they are primarily interested in the balance sheet profit of the enterprise, which is the source of payment of most taxes, profitability of sales, etc. Lending banks should receive an answer to the question of the solvency of the enterprise, i.e. its readiness to repay borrowed funds on time. The level of solvency is assessed by various coefficients: the total coverage ratio, the coefficients of absolute and current liquidity, financial stability, net revenue and net profit, etc. Contractual partners, as well as banks, are interested in the solvency of the enterprise and its financial stability. Thus, investors are directly interested in indicators that affect the return on capital of enterprises: sales volume/sales revenue, return on assets and sales, etc.
The ratings of pharmaceutical industry enterprises include 49 largest enterprises in terms of production and industry of medical devices – 46 enterprises of the industry. Only enterprises that have received profit, or rather net profit, as a result of economic activity for the reporting period under consideration will be analyzed. At the same time, the established frequency of rating compilation is 1 time per year. In this study, a comparative method of analysis is used in the evaluation of industry enterprises, i.e. a comparison of enterprises of the relevant sub-sectors (pharmaceutical industry and medical device industry) according to the selected evaluation criteria and the dynamics of changes in these criteria.
To assess the investment attractiveness of a set of indicators that determine the investment attractiveness of enterprises, a system of indicators characterizing the efficiency of enterprises, namely the possibility of profit, has been selected. In this regard, the following indicators of the HBO form No. 2 of enterprises and industrial groups for the reporting period and the corresponding period of the previous year were analyzed:
- Revenue from sales, net of VAT, excise taxes and similar mandatory payments. It is this indicator that is used as the main criterion for evaluating enterprises in most world ratings, including in one of the most authoritative ratings of the 500 largest companies on the planet, which is annually prepared by the American Fortune magazine, as well as in the well-known rating of Russian enterprises by the Expert magazine.
- The cost of products sold and commercial and management expenses. Minimizing these costs will increase the efficiency of enterprises.
- Profit from sales and balance sheet profit, which characterize the effectiveness of economic activity.
- Net profit, which shows how much profit remains at the disposal of the company based on the results of work in the reporting period and characterizes the ability of the enterprise to realize the ultimate goal of its commercial activity – to generate income. The efficiency of an enterprise is largely determined by the ability to increase revenues and minimize costs, which results in an increase in net profit.
Based on the absolute indicators of Form No. 2, relative indicators and their dynamics were calculated, according to which the investment attractiveness rating will be conducted, which will allow both large and small enterprises to be on an equal footing when assessing the effectiveness of their activities:
- Profitability of sales, as a balance sheet profit to revenue from the sale of products. This indicator characterizes the efficiency of the financial and economic activity of the enterprise as a whole and shows how much profit before taxation the enterprise receives for 1 rub. proceeds from sales.
- The profitability index of the main activity, as a profit from sales to the sum of the cost of products sold and commercial and management expenses. This indicator characterizes the efficiency of the company's core business and sales activities and allows you to estimate how much profit the company receives from sales per 1 rub. of costs associated with the production and sale of products.
- The net profit index, as the ratio of net profit at the disposal of the enterprise to sales revenue, showing the amount of free cash in sales revenue.
- The share of net profit in the balance sheet, characterizes how much free cash accounts for 1 rub. profit before taxation.
As in the ratings of medical industry enterprises by output indicators (the volume of production of medicines, medical equipment and spare parts for it, as well as the dynamics of their production), published in the journal "Remedium" quarterly, in the rating of investment attractiveness for each of the 8 indicators, a ranking of enterprises will be conducted and, depending on the place in the ranking, the enterprise or an industrial group will be awarded a certain number of points. As a result, the scores are summed up for all indicators, and the corresponding place of the enterprise in the rating is determined.
I would like to note that an economic analysis conducted on the basis of a limited set of selected indicators cannot give an absolutely accurate answer to the question raised about the investment attractiveness of a particular enterprise, and it is likely that taking into account a wider range of evaluation criteria may slightly change this assessment. In addition, each partner of the enterprise (shareholders, banks, tax authorities, etc.) has its own evaluation criteria for a purposeful detailed analysis of enterprises in the direction they are interested in, but given the validity of the choice of criteria and the desire to interest a wider range of partners of the enterprise, the rating will allow you to form a general idea of the position of a particular enterprise or industrial groups among the leading enterprises of the industry. I hope that the investment attractiveness ratings will be useful to the medical industry enterprises themselves participating in this project, and the range of objects under study will expand significantly and be replenished with new participants.
Literature1. Kreinina M.N. "Analysis of the financial condition and investment attractiveness of joint-stock companies in industry, construction and trade", M., 1994.
2. "Rating of investment attractiveness of enterprises of the Central Federal District", the AK&M Rating Center with the support of the Office of the Plenipotentiary Representative of the President of the Russian Federation in the Central Federal District and the Federal Securities Commission in the Central Federal District, http://www.akm.ru , http://www.bre.ru/risk/15619.html
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Portal "Eternal youth" http://vechnayamolodost.ru30.08.2010