Revolving Fund - is the proportion of assets of organization, in full consumption per production cycle and pays its value as a result of the sale of the product.Consider the structure, composition, performance of circulating capital in this article in more detail.
We expand the concept and structure of working capital
Revolving Fund - is represented by the cost of material, raw materials, production of inventory for the manufacture of the product, transport, storage.Separate the two groups of the material elements of the OB:
- materials and raw materials for the manufacture of the product.That is, those things that are not yet involved in the production.
- Work in progress.
The term and definition of working capital and understood more financial appraisal values, which are used for a short time.The company is recorded in the balance sheet include assets (short-term).Industrial stocks and production, which has not been completed, are divided into different groups of funding:
- Inventories are advanced in order to give itself the subject.
- Work in progress, funded by three methods:
- at full cost spent already or in the future work items (materials, electricity, fuel);
- depreciation, partial cost;
- wages.
Revolving Fund - is the material, technical, human and other resources that are involved in the process of production and sales.So it sounds more clear and concise definition.
use of revolving funds
effective, and efficient operation of the company - is to get the maximum benefit at a lower cost of production.In order for the company to work successfully, you need a clear and precise allocation of working capital.On the functioning of the working capital is affected by many factors:
- characteristics of manufactured products;
- features and individual technical and material support;
- amount of costs in relation to the previous period (progressive norms);
- reserves and regulations work in progress;
- strength and quality of the product.
main objective of any organization - at the lowest cost to get the most production-quality product.
Indicators revolving funds
on four main indicators can be assessed and the production process and the result of use of circulating assets.
Key indicators:
- turnover ratio means the amount of turnover for a certain amount of time.
- duration of one revolution.It shows how long it took for 1 production cycle.
- specific consumption of materials and raw materials.The total amount of raw material which has been spent for one product (by one).
- material consumption.The amount of financial resources spent on the production of the first unit of the product.
Conclusion
Revolving Fund - a kind of literacy distribution of tangible and intangible resources.The more thoroughly everything is distributed, the more rational and more profitable company operates.
