Financial assets, their valuation and avoidance of acquisition risks

Financial assets are any type of asset that can be represented:

- in cash;

- equity participation in the statutory fund of another company;

- the right under an agreement to receive any financial asset of any firm or cash, as well as the exchange of a financial asset or the obligation of another enterprise on conditions that are theoretically favorable for that company;

- an agreement that can be settled by an equity instrument that is non-derivative in the event that the company has a duty to receive a variable number of its own shares or a derivative where the settlement can be made in any other way except for the exchange of a certain amount of money or another financial asset For an equivalent amount of own share in the company. That is why contracts for the provision or receipt of its own equity instruments of the firm in the future are not included in the company's share documents.

Own financial assets - their valuation is made according to the following division into four categories:

1) financial assets at fair value through profit or loss;

2) financial assets that are available and ready for sale;

3) accounts receivable;

4) investments that are held until full repayment.

Like any economic category, financial assets have certain properties, the main one being the ability to increase the profitability of the company. So, any enterprise will never invest its money in the acquisition of property that does not have this property.

The risk and profitability of financial assets are treated as interrelated categories. Thus, the risk is the potential probability of losing a certain amount of invested funds or not receiving income in the predicted or planned amounts. From the generally accepted practice, there is a risk assessment using the concept of leverage.

The activity of any enterprise is constantly associated with production or financial risk, which must be taken into account depending on the position of the company. So, the company can be characterized both from the position of available assets (production risk) and the source of funds (financial risk).

Production risk is always due to the features of the company's operation within a particular industry. This is precisely what determines the structure of assets into which the company plans to invest its own capital. This type of risk is determined by such factors as regional characteristics, national traditions, market conjuncture, and infrastructure.

Financial risk is caused by the structure of the sources of funds, which implies the ways of investing money and the sources of their formation. An important issue is the ratio between debt and equity.

Financial assets: the assessment of risks and the factors that cause them is carried out using the analysis of the yield. The relationship between profit and the valuation of costs associated with the acquisition of assets or other fixed assets that are necessary to obtain this profit are characterized using an indicator such as leverage. This indicator can be characterized by the relationship between variables and constant costs.

Financial assets of any enterprise reflect the general well-being, prospects for increasing profits and characterize the organization's readiness for further development and expansion of production activities.