Investments in Business

Investments which are short-term in nature and which can be written off in the same year that the expenses occur are current investments or current expenditures. Capital investment or capital expenditures are long-term in nature, where the economic benefits is expected to applied over a longer period of time usually is typically a single large amount and the benefits arrive in a stream of smaller amounts over a fairly protracted period.

Capital investments can be for new project, expansion project, replacement project, mandatory project, and other projects like research and development for new products as well as various other long-term investments for building, land patents and so on. Strategic investments are capital investments which are linked to the business strategy of the company. It is not all capital expenditures or buying a car? but only investments which are related to the strategy of the organization or has a strategic importance to the organizations.

Therefore, it is very clear that the Investments by definition are important to every organization. These investments have the potential to affect an organizations stability and future success. Investments affect the profitability of the organizations and they have a bearing in the competitive position of the company. A good decision can boost earnings and sharply and dramatically increase the value of the firm, and a bad decision can lead to bankruptcy or have great difficulty recovering money tied up.

The reason is that most of these decisions involve committing a big sum of money and results heavily depend on forecasting and creating the future in a competitive and ever changing business environment. The risk and uncertainty is inherent in these investments. Investments are influenced by the organizational strategies and objectives making it the most important decision for every organization where the decision to invest corporate funds in capital investment will enable the organization