One of the most important elements ensuring the successful functioning of any company is the assets of the enterprise. They represent the property of the company, reflected in the financial statements in cash.
All assets of the enterprise can be divided into large groups: permanent and core. The first category includes movable and immovable property, intangible assets, fixed and working capital , etc. The main or, as it is customary to say, non-current assets of the enterprise are characterized by a long implementation period, which will be required if it becomes necessary to sell them.
The assets of the company include working capital. They, unlike the previous category, can be converted into money for a fairly short period. For example, these include finished goods in stock, materials and raw materials necessary for carrying out production activities, debt of debtors, securities issued for a short-term period, as well as cash on deposit and settlement accounts.
Non-current assets of the enterprise have several advantages, for example, reliability, as they ensure uninterrupted revenue generation even during serious financial difficulties, because they can be leased or leased out. In addition, they are less affected by inflationary fluctuations. However, one should not forget about the presence of shortcomings, because non-current resources with the active development of technological progress quickly wear out and require replacement or modernization, and therefore additional costs. As you know, an organization must study market conditions and be able to adapt to any of its changes, it is very difficult to maneuver non-current assets.
But current assets have the ability to restructure, so they can easily adapt to any changes in the economy. In addition, they are characterized by a high level of liquidity. Finished products in general can serve as a means for quick settlements with customers. Current assets of the enterprise are imperfect, highlight a number of disadvantages. First, the costs of maintaining their unused portion are high. Secondly, they are subject to the influence of the inflation factor, that is, there is a threat of impairment due to high inflation rates in the market. In connection with this, a third point can be singled out: the riskiness of certain financial assets.
The most important indicator reflecting the financial condition of the company is the net size of assets, thanks to which it is possible to calculate how productively the company works and how much it is provided with its own funds. In order to calculate the net assets of the enterprise, it is necessary to find the difference between the sum of the asset and the liability side of the balance sheet. This indicator is calculated annually in the manner prescribed by applicable law.
So, when calculating the amount of net assets, all non-current resources are used, that is, the result of the first section of the balance sheet, as well as current assets that relate to the second section. As an exception, the company can repurchase its own shares from shareholders for cancellation or re-sale to other buyers, as well as arrears in the form of a lack of funds for the mandatory contribution to the authorized capital of the joint-stock company.
Moreover, the size of net assets should be strictly positive, and their amount should be higher than the authorized capital of the company. This requirement allows you to clearly prove to internal and external users of reporting that in the course of its activities the company was able to increase the contributions of shareholders, which means it worked profitably. By law, it is allowed to reduce the level of net assets in relation to the size of the authorized capital only in the first years of operation, since during this period the main production is financed from equity.