Investment opportunities
Investment is defined as the process of converting financial funds into one or more types of assets that will be held for some time in the future. The importance of investment for economic and social growth and development is such that it has become one of the strong levers to achieve development. Efforts to grow and promote investment on the one hand will reduce the volume of stray cash and inflation, and on the other hand, by increasing the company’s performance level, it will lead to an increase in the wealth of investors.
Therefore, one of the most important corporate financial decisions is investment decisions. Companies can create maximum efficiency by knowing the factors affecting investment and using them to reach the optimal level of investment. This helps companies to get profitable investment opportunities and satisfy shareholders.
However, in the perfect capital market, investment decisions depend on investment opportunities, not the choice of financing method; Because what causes success is the optimal use of investment opportunities, for which financial policies that are effective in creating investment opportunities must be identified in business units.
The theory of the set of investment opportunities has an important place in the literature of financial management and has opened a new chapter in academic and applied research in the field of financial management of companies. Basically, an investment opportunity represents a set of policies and policies, and with the passage of time, it is always revised by the company. At least five steps for planning and controlling investment opportunities can be specified as follows.
- Identify investment opportunities
- Estimating and evaluating cash flows of investment opportunities
- Accept or reject investment opportunities based on an acceptance policy
- Approving the implementation of accepted investment opportunities
- Monitor, control and evaluate investment opportunities during implementation
Investment opportunities do not happen by themselves, but they must be identified or created. The timely and rational identification and use of investment opportunities of business units has a significant effect on improving the performance of companies; Because it makes them more profitable. Also, the set of investment opportunities of a company is one of its characteristics and has a deep impact on the attitude of managers, investors, owners and creditors to the company. Investment opportunities form an important part of a company’s value, and a company’s growth potential is rooted in its investment opportunities.
Investors always seek to use suitable investment opportunities and get more returns, and managers also allocate resources correctly and make appropriate decisions in this direction for the success of the company and the increase of shareholders’ wealth. Therefore, finding a way to be aware of suitable investment opportunities and prevent waste of resources is always of interest to interested groups (such as investors, managers, etc.). It will be very useful to find a criterion that can be used to evaluate the performance of companies, and in this way, to prevent wasting resources and investment opportunities by making the right decision.
