Investment in foreign property, analytics and assessment of property: Great Britain, England, London
The Financial sphere is quite a dynamic structure, related to distribution and redistribution of financial resources, investments being one side of it. Their goal is to keep and to increase the invested capital. In order to assess the prospects of investment it is necessary to conduct a thorough analysis. Depending on the investment medium it might benecessary to invite several groups of independent auditors. Property Assessment
In such a case when the subject of concern is a property itself and not the business located on its territory in order to determine a real estate value it will be necessary to consult independent experts- evaluators, and on the basis of their conclusions to make the final decision. There are two possible options of investment in commercial property. One being to completely restructure the business, the other one is to sub-let. Usually in order to get objective information on the property value you should consult professional evaluators that use two approaches while working on a property – systematic and logical. Systematic approach might include gathering, processing and analyzing of data. Logic alapproach is based on a comprehensive analysis which takes into consideration complex market factors. Cost-is-no-object, market and profit approach are among the methods of property evaluation.Cost approach
is baseon determining all the costs necessary for its restoration or substitution considering depreciation.Market approach
includes a combined result of different property assessment methods on the basis of comparing it to the similar ones. Profit approach
is determining combined possible profits gained by commercial use of the property taking into consideration possible inflation.
Thus, market approach is used on the condition of using necessary informationon similar deals, profit approach can be compared with placing financial resources on deposit, and finally cost-is-no-object reflects depreciated cost of the property. Financial Position Assessment
Incase of investing in an active business it is extremely important to assess the financial performance of the business which can be done by independent auditors or qualified representatives of the investor. The result of their analys is should be the system of financial coefficients of stability, liquidity,profitability and business activity reflecting the current position and its dynamics. One of the ways to assess the performance can be comparative analysiswith a similar enterprise. However it might increase the risk of distortions and inaccuracies and the general condition of economy and its tendencies should be taken into consideration while making a final decision.
The algorithm of the assessment of a company’s financial position includes the following stages:
- gathering data necessary for the analysis;
- structuring of the collected data;
- data processing with the help of application software; - getting basic figures of economic and financial activity as a result of data processing;
- analyzing the gained results with standard and basic figures;
- analyzing the dynamics of changing the figures within a certain period of time
- final conclusion about the financial performance of the company.With the helpof financial analysis it is possible to assess the correlation of own and borrowed funds, the ability of economic activity management, need in additional financing, liquidity level of the company’s assets, profitability, ability toraise capital, expediency of using the borrowed current access, financial stability, etc.
Sometimes when it comes to the assessment of technical equipment rather difficult situations appear. It is one thing when it is commonly used equipmentwhich has analogues in the market and is used in other similar enterprises. In this case itis appropriate to use the comparative method considering depreciation. However it might be rather difficult to assessthe value of unique equipment which does not have any analogues. In this caseit is required to conduct additional research in the industry in order to get objective data regarding the demand for the company’s products and services. Intellectual Property Assessment
Intellectual property might be one of the constituent parts of an investment medium.The major parts in assessing this type of propertyare:
- - the scope and structure of the rights to intellectual property;
- - initial agreements on the terms of financing for these developments with thesubsequent reciprocal fulfilment of obligations;
- -market conditions at the time of thetransfer of the property rights;
- - the position of the industry and business where the intellectual property isgoing to be used;
- - technological, financial and physical characteristics of the property;
- - the forecasting assessment made by experts on the prospective use ofintellectual property.
If securities are a part of investment medium and they influence the value of the property to a great extent, independent assessment of the securities is required. Assessment will allow to determine their real value and in case of debt securities to determine their effect on the general financial positionof the company. It is also of importance whether the securities are in the open financial market or over-the-counter turnover. Real and nominal value of the securities is determined. Financial stability of the company issuing the securities influences their value. Thus, it can be concluded that a comprehensive analysis and a professional approach towards the assessment of the investment medium can guarantee minimizing of the investment risks. In some cases (it is generally true with new products and intellectual property) it can be impossible to give an objective assessment of the current performance. In this case it is only intuitionand feeling for the demands in the market that can be relied on and the investor takes all the risks.