The decision of long-term investment or as it's called the decision of capital expenditure constitutes among the most significant and serious financial decisions. It's not only due to what is related to this decision including expending substantial amounts compared to the expenses, but also because the retune of this investment can't be obtained before a long period of time in the future as a minimum.
Objectives and target group
What's the Concept of Long-Term Investment? General speaking, the term of investment is associated with three economic concepts, which are limited to impairment, sacrifice, and waiting. In this sense, the investment means to sacrifice by an immediate specific monetary expenditure in exchange for an expected return in the future. Consequently, this expected return becomes a representative of the price of impairment, sacrifice, and waiting for the invested amounts during the investment period. On this basis, if the investment period is one year or less, then the investment will be short-term, and if the investment period is over a year, then the investment will be long-term. From the above mentioned, we can argue that the long-term financial investment is a financial association with substantial amounts immediately, with the aim of achieving profits in the long term. Thus, the long-term investment could be associated with several specifications, which are:
The huge expenditure, and the increased degree of seriousness in the long-term investment. Where there's a relation in the same direction between the long future period, which is described as the lifespan of the investment project, and the degree of risks associated with unsure or uncertainty. However, in contrast, the rates of the return associated with the long-term investment increases, in conformity with the nature of direct relation between the return and the risks.
The process of making long-term decision is often adopted by improvised methods depending primarily on the personal assessment. Where it has huge impacts on the future arise from the hugeness of the invested amounts in addition to the length of the future period resulting from this decision. However, the decision of long-term investment shall be taken on the basis of the knowledge and the skill related to decision-making with its sub-elements, which are represented in the cash, the securities, the accounts receivable, the inventory, and other elements directed to the capital. In addition, it shall depend on the focus on the effective management for each of its sub-elements.
For further presentation on the long-term investment, the British Academy for Training and Development has the pleasure to provide programs, sessions, and courses on the long-term assets and the financing decision.
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