Endogenous factors
Posted: Sat Jan 18, 2025 8:12 am
Business management and efficiency of ongoing processes.
In order to organize the investment financial flow into the project, the top managers of the company must organize the work competently – apply automation where it is possible, minimize bureaucracy, scale the most successful tools. With such a policy, the enterprise is able to develop, increase income, reduce expenses, which will cause an increase in the profitability ratio of its own investments and sponsors' investments in the business.
Quality of services and goods.
The price of a service or product is formed from their cost price and expenses for storage, transportation, etc. At the same time, companies producing high-quality goods or services can set a higher price for them. ROI in this case will increase.
Innovation and technological progress.
In order to improve the quality of lawyer data package services and products and be able to raise their price, companies must constantly purchase new equipment and spend money on developing innovative technologies. Thus, the latest methods and developments in the creation of electric cars lead to an increase in their cost compared to most conventional cars, and the value of the shares of manufacturing companies increases.
If a company develops steadily and introduces new technologies into production, it becomes interesting to donors who agree to invest more funds. As a result, the company's capitalization and its ROI increase.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
What is the Return on Investment Index
The return on investment index, or profitability index (PI), is a relative indicator of investment efficiency. It shows how much income each sponsorship ruble provides, taking into account the time value of money.
The index is the ratio of the cost of planned financial flows, reduced to a specific moment, and the initial investment. If it is necessary to calculate the return on investment in a project when they are made once at the start, then this indicator is determined by the formula:
PI = PV / I 0
in which:
PV – present value of planned cash flows;
I 0 – initial investment in the project.
This is a simple and clear formula used for quick analysis, provided that investments were made at the start of the project once.
In fact, investments are often stretched out over time, so when determining the efficiency indicator, they are also discounted. Then the formula for their profitability index will be as follows:
PI = PV (CF+) / PV (CF-)
Where:
PV (CF+) – present value of all incoming financial receipts;
PV (CF-) – it is also all outgoing cash flows, including initial investments.
Here it is necessary to explain that subsidies are usually needed when the project itself is not able to earn certain funds per unit of time. That is, when it has a negative cash flow and there is a cash gap or additional capital investments are needed.
Then the owner's funds are used or the finances earned and not distributed in previous periods are reinvested. In this case, the investment volume will be determined by the sum of all cash flows with a minus sign. To calculate the index, all cash flows are discounted, and negative figures are taken modulo.
In order to organize the investment financial flow into the project, the top managers of the company must organize the work competently – apply automation where it is possible, minimize bureaucracy, scale the most successful tools. With such a policy, the enterprise is able to develop, increase income, reduce expenses, which will cause an increase in the profitability ratio of its own investments and sponsors' investments in the business.
Quality of services and goods.
The price of a service or product is formed from their cost price and expenses for storage, transportation, etc. At the same time, companies producing high-quality goods or services can set a higher price for them. ROI in this case will increase.
Innovation and technological progress.
In order to improve the quality of lawyer data package services and products and be able to raise their price, companies must constantly purchase new equipment and spend money on developing innovative technologies. Thus, the latest methods and developments in the creation of electric cars lead to an increase in their cost compared to most conventional cars, and the value of the shares of manufacturing companies increases.
If a company develops steadily and introduces new technologies into production, it becomes interesting to donors who agree to invest more funds. As a result, the company's capitalization and its ROI increase.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
What is the Return on Investment Index
The return on investment index, or profitability index (PI), is a relative indicator of investment efficiency. It shows how much income each sponsorship ruble provides, taking into account the time value of money.
The index is the ratio of the cost of planned financial flows, reduced to a specific moment, and the initial investment. If it is necessary to calculate the return on investment in a project when they are made once at the start, then this indicator is determined by the formula:
PI = PV / I 0
in which:
PV – present value of planned cash flows;
I 0 – initial investment in the project.
This is a simple and clear formula used for quick analysis, provided that investments were made at the start of the project once.
In fact, investments are often stretched out over time, so when determining the efficiency indicator, they are also discounted. Then the formula for their profitability index will be as follows:
PI = PV (CF+) / PV (CF-)
Where:
PV (CF+) – present value of all incoming financial receipts;
PV (CF-) – it is also all outgoing cash flows, including initial investments.
Here it is necessary to explain that subsidies are usually needed when the project itself is not able to earn certain funds per unit of time. That is, when it has a negative cash flow and there is a cash gap or additional capital investments are needed.
Then the owner's funds are used or the finances earned and not distributed in previous periods are reinvested. In this case, the investment volume will be determined by the sum of all cash flows with a minus sign. To calculate the index, all cash flows are discounted, and negative figures are taken modulo.