Investment

Investment 

Meaning:- Investment is a process of capital formation, or a process of increase in the stock.

I  = Investment 

K = Capital 

K'= Change in                     capital

Increase in the stock of capital during the year is called investment,changing the year.

I=k'

Capital formation 

Meaning:- Change in the stock of capital is also called capital formation.

Capital formation contains:-

• Fulid investment. Example:- plant and machinery.
• Inventory investment. Example:- (1)furnished goods.                          (2)semi furnished goods.                (3)Raw materials.

" Change in the inventory stock during the year is called inventory investment of the producer."