Investment potential assessment
Investment potential assessment (IP) is a set of procedures to determine the degree of attractiveness of a business for investment. The main indicator of IP is considered to be a stable long-term income for the investor. Only a professional who is familiar with the necessary protocols can conduct research and draw up a legitimate document. The report must comply with the Appraisal Act of India and federal standards.
What do we evaluate:
- property complex of the company;
- the whole business.
By what parameters:
- Financial indicators: solvency, liquidity, business activity, market stability.
- Production potential.
- Market stability: the life cycle of an enterprise, supply and demand for products, and share in the segment.
- Reputation: attitude to the company in the market, relations with partners and counterparties, and the levelof customer loyalty.
- Risks: a possible drop in profits, pricing features, exchange rates, increased competition, and default by suppliersor partners.
When evaluating IP, external factors are also taken into account that the enterprise cannot change, but is forced to take into account in its work:
- political and economic situation in the whole state or in a particular region;
- demographic characteristics of the region;
- the importance of the industry for the market, its level of development, and competition between participants;
- investment picture in the segment: dynamics and prospects;
- level of infrastructure development.
In what situations is an assessment of investment attractiveness needed:
- the company is looking for investors;
- it is necessary to achieve optimal conditions for large-scale lending;
- a new direction or enterprise is opened within the framework of an existing business;
- an objective assessment of the company's potential for making managerial decisions is needed;
- when developing a long-term strategic plan.