Definition of Investment (Part 2)

Definition of Investment (Part 2)

Many experts who have formulated the definition of investment. The term investments related to various investment activities or saving a certain goal-oriented and how to achieve that goal (EP Pratomo: 2008, 7). According to AH Manurung (2006: xvii) defines investment as consumption temporarily postponed and will be consumed more in the future. That is, one party, both individuals and institutions will postpone their consumption with the purchase of investment instruments and then sell the investment instruments in the hope that the additional or greater value than ever. 

The definition of investment by Eduardus (2001, 3) is the commitment of a number of funds or other resources committed at this time, with the aim of obtaining a profit in the future. While the definition of investment according to Ahmad (1996, 3) is the placement of funds or money in the hope to obtain benefits or certain additional advantages over the money or funds. That is, some invested money or invested in certain areas that are considered investors can get results.

Investment (in wikipedia.org) based on economic theory, means the purchase (and thus production) of capital / capital goods which are not consumed but are used for the upcoming production (production goods). Examples among other investments to build toll roads, or build a factory, clearing new land, or someone who went to college education, and so forth.

For more details, investment is also a component of Gross Domestic Product by formula GDP = C + I + G + (XM). The investment function in that aspect is divided in non-residential investment (such as factories, machinery, etc.) and residential investment (new houses). Investment is a function of income and interest rates, given by the relation I = (Y, i). An increase in income will encourage greater investment, where higher interest rates will lower the interest for investment as it becomes more expensive than borrowing money. Even if a company chooses to use its own funds for investment, the interest rate indicates an opportunity cost of investing those funds rather than lend to earn interest.

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Healthy | Smart | Rich, at: 2/16/2012

Evaluation of Common Size Percentage

Evaluation of Common Size Percentage

Report a percentage per component shows the percentage of total assets invested in each type of asset. By studying the report in this percentage and compares with an average of the industry as a whole than similar companies, will be known whether we invest in something assets have exceeded the limits of generally accepted (over the investments) or it is still too small (under investment) brother "so for the next period we can take the necessary policies, so that matches our investment in assets is not too small or too big.

Statements in this way also shows the distribution rather than debt capital, so it shows the sources from where funds are invested in such assets. About this study will show which sources indicate to what extent the company uses its ability to obtain credit from outside sources, because of it also can be suspected / known how much the margin of safety which is owned by the creditors.

Percentage per component contained in the balance sheet would be a component percentage of total assets, so that comparisons horizontally from year to year will only show a trend rather than the relationship (trend of relationship) and does not indicate whether or not absolute changes in can be seen if returned to absolute data. So change from year to year does not indicate with certainty the changes in the absolute data.

Report a percentage per component in relation to the income statement, showing the number or percentage of net sales or net sales each individual cost and the percentage that are still available for income. Therefore, the common size percentage analysis is widely used by companies in relation to the income statement, because of the close relationship between sales, cost of goods and operating costs, are not widely used to balance. Next.

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Healthy | Smart | Rich, at: 5/29/2011

Investment (Part 1)

Investment (Part 1)

According Kertonegoro (1995, 4) choice of investment of time can be divided into two, namely the short term or long term. Short-term investments are investments that the time for one year or less than one year, whereas long-term investments are investments with longer maturities or no maturity to know. 

Investment as well as to increase income each person also carry financial risk if the investment failed. Investment failure is caused by many things, among which is the factor of safety (whether due to natural disasters, political or caused by human factors), the rule of law, and others. 

 
In investing there are two kinds of assets, namely real assets and financial assets, which together can be considered as a means of investment. Real asset is an asset that has a form. Examples are land, houses, gold and other precious metals. Investing in real assets is common. For example, buying a house, and then rent them out, so get a monthly income. Financial asset is an asset that his form is not visible, but still has a high value. Generally there are financial assets in the banking world and also in the capital market, in Indonesia known as the Indonesia Stock Exchange. Some examples of financial assets are money market instruments, bonds, stocks and mutual funds. 

 
The investment also recognize the existence of ROI, ROI (return on investment) or ROR (rate of return) is the ratio of money gained or lost on an investment, relative to the amount of money invested. The amount of money gained or lost can be called interest or profit / loss. Investing money can be referred to as an asset, capital, principal, investment cost basis. ROI is usually expressed as a percentage and not in decimal value. 

 
ROI does not indicate how long an investment. However, ROI is often expressed in units of annual or annualized and often also expressed to a calendar or fiscal year. ROI is used to compare the return on investment between investments that are difficult compared using monetary values. Next.

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Healthy | Smart | Rich, at: 5/14/2011