Long-term investment refers to the investment that does not meet the short-term investment conditions, that is, the investment that is not prepared to be converted into cash within a business cycle of one year or more. The purpose of long-term investment obtained by enterprise management is to hold rather than sell, which is an important difference from short-term investment. Long-term investment also refers to the enterprise's investment in operating fixed assets, that is, internal investment.
Enterprise investment is different from that of individuals or professional investment institutions. Enterprise investment is direct investment, that is, cash is directly invested in productive assets, and then it is used to carry out business activities and obtain cash. Individuals or professional investment institutions invest cash in enterprises, and then enterprises reinvest these cash in operating assets, which belongs to indirect investment.
The purpose of long-term investment is to obtain fixed assets and other labor materials needed for production and operation, so as to make use of these resources to earn operating profits. The purpose of investment is not to obtain the resale income of fixed assets, but to use these fixed assets. Some enterprises will also invest in other companies, the main purpose is to control their own operations and assets, in order to increase the value of their own enterprises, rather than mainly get dividends.