Экономические науки / 4.Инвестиционная деятельность и фондовые рынки.
Khomenko V. A.
1st year master degree student faculty of
international economic relations
Savytska L. V.
Associate Professor, Doctor of Philosophy
Simon Kuznets Kharkiv National University of Economics
EVALUATION OF ENTERPRISE INVESTMENT ATTRACTIVENESS IN UKRAINE
Investment attractiveness plays an important role in enhancing investment
processes. In the context of limited resources and fierce competition between
enterprises for getting better quality and cheaper resources the main task of
the enterprise is to represent the enterprise to investors as an attractive
investment object. For potential investors it is very important to determine
the feasibility of investing in the enterprise on the basis of evaluation of
investment attractiveness.
There
are a large number of methods of determining enterprise investment
attractiveness nowadays. However, existing methods of determining the level of the
enterprise investment attractiveness do not satisfy the investor's demand in making
decision. Therefore, existing approaches to evaluate enterprise investment
attractiveness have to be improved, particularly considering the peculiarities
of the domestic economic environment, financial market development, etc.
Despite
special attention to this topic, scientists have not developed an integrated
methodology of evaluation of enterprise investment attractiveness. Such
methodology will give an opportunity to expand the investment capabilities of
the country, stimulate investment flows and strengthen the economic system.
The
aim of this article is to review and summarize existing techniques of evaluation
of enterprises investment attractiveness, identifying their disadvantages in
today’s conditions.
The
object of this research is a process of evaluation of enterprises investment attractiveness
in Ukraine. The subject of this research is modern methodical approaches to
evaluation of enterprises investment attractiveness.
On
the basis of analysis as for theoretical and methodological approaches to evaluation
of enterprises investment attractiveness we can distinguish two conceptually
different approaches.
According
to the first approach, the evaluation of enterprise investment attractiveness is
based on the analysis of its financial performance, while the second approach is
aimed to determine the level of underestimation of its securities.
Thus,
a lot of scientists tend to focus on the analysis of the financial performance
of the enterprise [1, 2]. Financial analysis enables to estimate the
profitability of the enterprise, its competitiveness, solvency, resource
efficiency, financial stability and business activity. Results of the
estimation are selected according to specific methods and then, as a rule, they
are reduced to an integral index which acts as a measure of enterprise
attractiveness for the investor.
There
are no single, generally accepted principles of analysis of enterprises’ financial
position in Ukraine. That is why every specialist chooses financial ratios on
his own discretion. They use indicators of liquidity, profitability, business
activity and financial sustainability in comparison with indicators of market
activity, financial situation and cash flow. But it is recommended to consider
not only the financial component but also other components of investment attractiveness.
It helps to form holistic view of the enterprise opportunities.
The evaluation of enterprise investment
attractiveness, according to second approach, involves determining domestic
investors (investment) value of the object and comparing it with a price
established by the market or the property seller. The higher investment costs
estimated by investor exceed the price installed by the market or the seller, the
more attractive the object of evaluation is. So the criterion is the level of
underestimation of the enterprise value.
However,
the second approach of domestic enterprises evaluation is complicated by
underdeveloped and inefficient Ukrainian stock market, deficiency of necessary
information that makes it hardly impossible to conduct evaluation by this
approach [3]. Therefore, at the present stage of Ukrainian economic development
it is recommended to use the approach based on the analysis of the financial
performance of the enterprise.
In
addition to these two approaches, some scientists distinguish an expert-rating
system of the evaluation of region investment attractiveness. The most famous
ratings of this approach are Institutional Investor Rating, Euro money Rating,
Business Environment Risk Index (BERI).
The
expert-rating system of evaluation of region investment attractiveness is
interesting from the economic point of view but it is difficult to adapt this
system for the evaluation of single enterprise investment attractiveness.
So,
having analyzed disadvantages of existing approaches to evaluate enterprise investment
attractiveness, it is recommended to improve methodology of evaluation of enterprise
investment attractiveness in a following way:
1)
analyze not only the integral evaluation but basic enterprise indicators
according to its industry;
2)
carry out the enterprise investment attractiveness considering the perspective
of unity and interaction of its aspects: technical, geographical, human,
organizational, environmental, resource, financial, economic, legal,
commercial;
3)
any methodology of evaluation of enterprise investment attractiveness should be
based on the principle of useful application for potential investors.
On
the basis of analysis of theoretical and methodological approaches to evaluation
of enterprise investment attractiveness it is possible to make conclusion that
existing methods to determine the level of enterprise investment attractiveness
do not satisfy the investor's demand in making decision.
In
modern science there is no consensus regarding to the methodology of evaluation
of enterprises investment attractiveness. Each of the considered methods has
its advantages and disadvantages. Therefore the method of analysis of enterprise
investment attractiveness requires the adjustments and new approaches. Some recommendations
to improve the modern techniques of evaluation of enterprises investment attractiveness
are made. These recommendations form an important methodological basis for
further research in this direction.
References translated and transliterated
1. Andras O. Evaluation of investment attractiveness of
tourism industry enterprises / Bulletin of National Technical University. – 2010.
– Vol. 8. – P. 15-20.
2. Hutorov O., Kramarenko K. Evaluation of investment attractiveness of
the agricultural enterprises / AIC Economy. – 2009. – Vol. 10. – P. 23-31.
3. Sklyar I., Shkodina Y. Rating evaluation of financial state as a constituent
of enterprise investment attractiveness / Mechanism of regulation of the
economy. – 2009. – Vol. 2. – P. 41-52.