What is a clean investment?
Clean investment is a reflection of the amount of money that the company spends on financing its operations. A net investment is determined by deducting depreciation from capital expenditure. Businesses are interested in promoting active growth and net investments are an important part of growth over time. Companies that do not invest in their operations can become ineffective, unable to adapt or imprisoned behind the rest of the market. On the other hand, companies that invest too much money in their operations can suffer from poor liquidity and may not be financially flexible. This includes expenditures associated with acquiring real estate, modernization or replacement of equipment and more. These expenses are part of business and are a literal example of the proverb "You have to spend money to earn money." Depreciation applies to losses that have been found over time, resulting in possible devaluation of assets.
Clean investment increases the means of production for the company, which makes it possible to expand operations and improve efficiency. In the short term, this may include considerable costs, but these costs are designed to make money for business in the long run. Companies that neglect a net investment may encounter problems in the future when they are forced to replace outdated systems at the same time or are obliged to spend considerable amounts in that year to catch up with previous years.
Depreciation from capital expenditure allows companies to see how much money they spend on operations after losses associated with maintenance, wear and routine expenditures. This amount may vary considerably depending on society and industry, and in any given year it may fluctuate in response to numerous factors. The net investment is documented together with other financial information on statements and published with the company's operation.
Internally, financial documentation is used to decideon business activities and future investments. It can also be used to monitor progress, to identify weak points in the company's operation and for many other tasks. Public traded companies make such publication available to their shareholders and other public members. Investors use this information to decide which company to invest and how to distribute their investment.