MINIMUM PERMISSIBLE LEVEL OF INVESTMENT EFFICIENCYOF UKRAINIAN BUSINESS: ASPECTS OF THE ORGANIZATION OF INVESTMENT COMPANY

Abstract

Considering investment decisions on a particular business in the country (including the investment company), the actual issue is the level of its investment efficiency, taking into account the alternative and the level of devaluation of the national currency or inflation. The aim of the work is to determine the minimum allowable level of investment efficiency of Ukrainian business, taking into account the alternatives and features of the national currency, failure to achieve which makes Ukrain-ian business investment-inexpedient in the long run. A method for determining such minimum allowable level of investment efficiency is proposed, which involves calculating the amount of average annual growth of the stock index selected as the best investment alternative, the average annual dividend on such stock index, and the average annual devaluation of the national currency against the currency of such stock index. It is determined that the level of devaluation of the national currency in Ukraine against the US dollar exceeded the official inflation rate, which is why the above method took into account the average annual rate of depreciation of the national currency. The best alternative for financial investment is the US stock index S & P-500 and, consequently, investment in shares of corporations that are part of this index. Taking into account the specifics of the national currency and investment alternatives for Ukraine, the minimum level of investment efficiency of capital use by economic entities is set at 26.68 %.This interest rate (namely: 26.68 %) should be used to assess the feasibility of investment projects in Ukraine in order to calculate the classic indicators: net present value (NPV), internal rate of return (IRR), profitability index (PI), present term payback (DPB). In addition, the size of return on assets and return on equity at Ukrainian enterprises must be at least 26.68 %. It is determined that the average enterprise in Ukraine does not meet the conditions for achieving the minimum required level of return on assets and return on equity of 26.68 %. Only a few businesses in the country meet this condition, and most of them - only in terms of return on equity. In order to preserve and increase the capital of investors, Ukrainian investment companies should, in most cases, investin the shares of the world's leading corporations, which are part of the US stock index S & P-500, rather than in the enterprises of their country. The high level of inflation in the country is identified as an important factor that negatively affects the efficiency of the business in Ukraine and, especially, the activities of industrial enterprises with a significant production cycle. In addition to the depreciation of the assets of economic entities, inflation causes the phenomenon of paying the tax from a relatively zero level of efficiency. Taking into account such taxation in Ukraine, the minimum allowable level of investment efficiency of business is 29.64 %. Conditionally zero level of business efficiency is achieved when the return on assets of the entity is equal to the average annual rate of depreciation of the national currency. The higher the inflation rate in the country, the more taxes are paid at a relatively zero level of efficiency, and the higher the value of the minimum allowable level of investment efficiency of the business in proportion to the income tax rate and the average annual devaluation of the national currency. The presence of a high level of inflation in the country and an income tax creates conditions for the outflow of investment capital to other countries.