All these assets are financed with own resources and others that represents a liability, and liabilities of every company has its cost, but sometimes we’re not very aware of it. (The accounts do not register the opportunity cost, the risk assumed by the company, or inflation, for example).

By definition, the profitability of assets is obtained, must be greater than the cost of liabilities. But also for the survival needs of the company. However, reality often shows something quite different.

All assets of a company is not composed of fixed, there is also the current assets. But especially in industrial companies, the asset has a very important and should therefore be carefully studied and analyzed investment decisions. Especially considering that this type of investment involves the resources of the company’s long-term. It is therefore “absolutely essential to plan well the investment projects, with an eye not only in the short term but also medium and long term.”

This leads to the need to know about methods of analysis and evaluation of investments, but also to apply common sense, since no test method to ensure the success of a particular investment. The investment analysis models are just part of the process of decision making, but they should never replace the trial of the analyst, ie the decision maker.

In addition, we must not make the mistake of analyzing investment very well when it is a project, and forget about it, when it is a reality, which unfortunately happens in more than one company and more than one occasion.

Often, once the investment implementation forget it. The return on assets is calculated (usually) on a global basis, not entering the individualized analysis of each particular investment, and in any case, the accounting criteria (profitability) is not the same as that used in investment analysis. (VAN, for example).

Regardless of the method used to evaluate an investment, it is necessary to have data to do so. No data or information, it is not possible to apply any method of evaluation, and this is precisely the crux of the matter. The difficulty in evaluating an investment is not in the calculation of NPV or the IRR, the real difficulty lies in the economic forecasts of such investments.

The investment valuation models used by financial flows expected of them, ie, monetary values, but these flows are in turn a consequence of related financial flows. Therefore, a “good reviews” not only requires the correct application of the method chosen, requires especially a good analysis, understanding, and forecasting of economic flows of the project, ie, its operations and generation, to become liquid financial flows , which is the basic information used by the different valuation models.

The decision to invest should be taken with caution and prudence: the numbers are always needed, but these are interpretable, and clearly the results of the forecasts have much to do with the working hypotheses that have been handled previously. Therefore, investment decisions should only be important if there is a full and well-founded belief in their profitability and viability.

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