INFLUENCE OF THE INVESTMENT DECISIONS ON THE RETURN OF THE COMPANY

Pop Mugurel Gabriel Sorin ()
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Pop Mugurel Gabriel Sorin: 'Dimitrie Cantemir' Christian University Bucharest, Faculty of Economic Sciences of Cluj-Napoca

Annals of Faculty of Economics, 2012, vol. 1, issue 2, 302-307

Abstract: We propose in this study, to make an analysis of the influence of the investment decision on the return of the company. The goal of our research is the quantification of the influence of investment activity on profitability. Fulfilling such a goal has forced us to research the existing literature in this field, both in our country and abroad, ascertaining the existence of a unitary meaning of the criteria for investment projects'(tm) evaluation. Of course, the realization of such research was possible only after close consideration of the opinions expressed in the relevant literature on this area. Our research aims to be a theoretical-applied one. It is based on comparisons we make between the two criteria for assessing investment projects namely: that of net present value (VAN) and internal rate of return (RIR). By creating a suite of phase calculations, based on information from economic and financial documentation of corporate investments, we separated the influence of the policy investment decisions on profitability. We are convinced that the most accurate determination of the influence of policy investment decisions on profitability helps the financial management, facilitating the process of adopting the most appropriate policy decisions that ultimately leads to the objectives formulated by the financial policy. The result of our research is the quantification of the influence of investment policy decisions of the firm on profitability.

Keywords: politics; investment decisions; evaluation criteria; updated net income; internal rate of return; influence (search for similar items in EconPapers)
JEL-codes: G31 (search for similar items in EconPapers)
Date: 2012
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