Operational management of the portfolio of real investments
On the basis of a detailed assessment of each investment project, they are finalized in the portfolio of real investments formed by the organization (enterprise).
The formation of a portfolio of real investments is based on the following principles.
1. Multiple selection criteria. This principle allows you to take into account the entire system of goals and objectives of investment activity, which are determined by the external and internal socio-economic environment. Its essence is the ranking of the goals and objectives of investment by their importance for the organization (enterprise) -investor. For example, in accordance with such parameters as profitability, payback period and safety of investments.
2. Systematization of criteria by types of investment projects. A similar classification of criteria is carried out for investment projects that are costly, replacement projects, independent and other projects.
3. Accounting for the impact of the objective parameters of the investment activity of the organization (enterprise). Such parameters can be the planned amount of capital investments, the forms and directions of sectoral and regional diversification of investment activities, the availability of own sources of financing capital investments, the possibility of raising funds from the financial market, etc. .
4. Achieving the relationship between investment activities with the current (normal, operating, main) and financial activities of the organization (enterprise). This relationship is provided by generating cash flows from current, investment and financial activities and their concentration in a single cash flow in within specific intervals (periods) of time. Thus, the implementation of a specific investment project and portfolio as a whole is provided by appropriate sources of financing from current and financial activities (for example, net profit, depreciation, funds raised in the credit and financial markets). Returnable cash flow from investment activities is formed after the successful implementation of projects with specified performance parameters.
5. The balance of the portfolio of real investments with the material and financial resources of the organization (enterprise). It is provided through parameters such as "profitability - risk" and & quot; Yield - Liquidity & quot; taking into account the chosen investment strategy (conservative, moderate or aggressive). In the process of ensuring the balance of the investment portfolio, it is necessary to find opportunities to reduce the level of risk and increase liquidity at a given level of profitability of real investment projects.
Based on these principles, the financial aspect of managing a portfolio of real investments is to form a capital budget. In investment practice, such a financial plan is often called the budget for portfolio realization. The development of the budget for real investment portfolio includes the solution of two main tasks:
• determination of the volume and structure of capital expenditures at the individual stages of the operational (calendar) plan;
• Ensuring the necessary flow of financial resources (sources of investment financing) to recover these costs within the total volume of real money allocated for the implementation of a particular investment project.
The base for compiling the capital budget is as follows:
• operational (calendar) plan for the implementation of the investment project;
• the general scheme of financing an investment project;
• Consolidated estimate calculation and local estimates for the performance of certain types of construction and installation work;
• a preliminary cash flow schedule for the individual stages (steps) of the investment project;
• the financial position of the organization (enterprise) - the developer in the current period and the forecast for the future.
In the process of implementing an investment project, it is advisable to compile two types of budget:
• budget of capital expenditures and receipts of funds, or capital budget (it is developed at the stage of construction and installation works);
• The budget of current money incomes and expenditures (flows), or the current budget (it is developed at the stage of operation of the facility after putting it into operation).
The form of the capital budget of the organization (enterprise) is shown in Fig. 6.3.
Fig. 6.3. The capital budget of the organization (enterprise) for the forthcoming period (year, quarter, month)
The purpose of capital cost planning - ensuring the implementation of the investment project in the volumes and technical equipment provided by the construction technology.
As the volume and structure of capital investments are preliminarily justified in the investment business plan of the project, the calculations of capital expenditures in the budget for the forthcoming period are reduced to the following procedures:
• the allocation of the total investment in the business plan of their share, which relates to the period under review (if the investment project implementation time exceeds one year);
• specification of the period based on the requirements of the general contractor for changing the technology of construction and installation works;
• specification of the volume and structure of capital investments due to price changes in the current period for material resources, equipment, transportation services, etc.
• clarification of the initial amount of investments, taking into account the financial reserve provided for in the contract with the contractor and the estimate documentation for compensation of unforeseen expenses arising in the process of construction (internal insurance of business (commercial) risks).
Accounting for the receipt of funds in the development of the capital budget includes the flow of financial resources from individual sources: own, attracted and borrowed. The process of developing this section of the budget provides the following basic procedures:
• clarification of the total amount of funds received (it must correspond to the volume of investments in the investment budget);
• Clarification of sources of funds receipt and their structure (it is expedient to finance investments in the first place at the expense of own funds);
• Ensure the timing of the flow of investment resources and the flow of capital costs.
In terms of planning time, capital budgets are subdivided into annual ones with quarterly breakdown of indicators and a quarterly one with monthly distribution of key parameters.
In practice, the capital budget of an organization (enterprise) is often limited. Therefore, the management of the organization (enterprise) is faced with the task of developing an investment portfolio structure that, within the limits of available funds, gives the largest amount of net cash flow.
This task is reduced to the selection of such a combination of investment projects, which maximizes the net attracted effect ( NPV ). Then, investment projects are combined taking into account divisibility (the possibility of partial realization) or indivisibility (the possibility of full implementation).
The initial data for selecting investment projects for implementation can be summarized in the following form (Table 6.8).
Table 6.8. Initial data for selection of investment projects in the investment portfolio of the organization (enterprise)
Capital investments in the investment project, million rubles.
Internal rate of return (// r /?),%
Net reduced effect of NPV (category 2 х gr.3), million rubles
To improve the management of the investment portfolio, the technology of its current adjustment is used. Its necessity is caused by two main reasons.
The first of these is related to the appearance in the market of new, more efficient objects for investment.
The second reason may be due to a significant decrease in the efficiency of the portfolio of real investments in the process of its implementation.
In such a situation, it is often necessary to make a decision on the withdrawal from individual investment projects.
The high responsibility for making such managerial decisions is due to the fact that they often lead to the loss of the expected profit (income) and even part of the capital investment. The difficulty in making such decisions is that they should be based on an in-depth analysis of the current market situation and a forecast of its further development.
The key criterion for deciding to exit an inefficient investment project is the expected value of the internal rate of return (IRR). Continuation of the project is possible if the following inequality is met:
where IRR is the internal rate of return; - the average rate of deposit interest, taking into account the inflation factor in the loan market,%; - the level of the risk premium associated with the implementation of the investment project,%; - the level of the premium for low liquidity, taking into account the projected increase in the duration of the investment project,%.
In the process of choosing concrete forms of exit from inefficient investment projects, it is reasonable to proceed from the requirements of economic efficiency (minimizing the loss of profits, income and invested capital) and preserving the image of the investor organization (enterprise) in the commodity and financial markets. The main forms of exit from inefficient investment projects are:
• refusal to implement the investment project before the start of construction and installation works;
• sale of unfinished construction projects;
• sale of the investment object at the stage of its operation;
• A shareholding of an investment project at any stage of its realization with a minimum share in the share capital, etc.
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