fixed and circulating capital is of paramount importance for the calculation of the balance of the company.These are numerical characteristics are an indicator of profitability and the well-being of the company.
fixed capital formation - is the terms of the company's capital, which is the financial, material and intellectual values, which are owned by the company and are in the normal course of business for profit.The business idea of the founder of the company and determines the desired amount of capital.
known that no firm can be formed and start to function without the initial capital, which is put into circulation at the beginning of the implementation of the business project.From its correct calculation and planning of all financial operations at the initial stage depends on the successful launch of entrepreneurial ideas and new business hold competitive positions in the market.Therefore, beginning businessman during the planning process of implementing its undertakings should carefully estimate the allowable minimum and maximum possible funds available, and necessary to achieve the goal.Determining the value of the mandatory initial capital is made depending on the industrial sector, which is supposed to implement business ideas.
When calculating the required initial capital is of great importance to the distribution of such working and principal.During the planning is also very important to determine the structure of capital, it is an indispensable element in the calculation of the initial capital.
What is the division into fixed and circulating capital?
Fixed capital
It includes buildings, land, vehicles, equipment, tools, machines, innovative property, patents, licenses.
That is, movable and immovable property of the company, which has a particular value as determined by the depreciation accounting practices at a given time period.Basic tools for several years are involved in the production process and transfer their value to final products or items in stages over several years.
Working capital
The concept of working capital includes everything that is planned to be used for the company's employees, as well as for the production or sale.
main working capital has the following component parts:
- funds (payroll, cash, the amount of funds for the purchase of raw materials or goods);
- material means (tools nondurable, izgotovitelnye materials, raw materials, products or goods purchased for sale).
ratio of working capital and the main
defining the structure and the ratio of parts working and fixed capital must be considered in proportion to all parts of its total volume.These errors are of great importance in the selection for the acquisition of an office building and production facilities or retail space and equipment.If you do not take into account the spent finances to the volume of funds is left to the working capital, that is, raw materials, goods for sale, the money for their purchases, funds for salaries of employees, the company from the very beginning can simply "suffocate", that is to stop the activity.Therefore, the larger the magnitude of the planned work of the enterprise, the greater the need for an increased amount of working capital.
Depending on the industrial sector, fixed and circulating capital also has a different ratio.It is determined by the complexity of materials, as well as the complexity of the products.
