An essential condition for the smooth functioning of any business entity is the availability of certain sources and means. Without the basic production assets, which include buildings and structures, machinery and equipment, transport and other means of labor, the fundamental production process of the company is impossible. In the absence of these non-current assets, which are the basis of the activity of any enterprise, it would be impossible to carry out the planned output.
In addition, for the normal functioning of the organization needs working capital. First of all, they are monetary resources. Their presence allows you to purchase working capital in the required volume. In turn, the presence of all these resources will ensure uninterrupted production.
Fixed and circulating assets require economical and rational use. This is the first priority facing the enterprise management. For more effective management of the funds that the organization possesses, it is necessary to know their composition and structure.
Revolving funds of an enterprise are the resources of a business entity that, over the course of their use, consistently switch from monetary to productive, and then to commodity form. In this regard, it becomes necessary to divide them into two categories. The first of these is production assets. The second is circulation funds. The first category of current assets includes the means of production and labor. In contrast, circulation funds are finished products in conjunction with monetary resources.
Working capital, in contrast to non-current, are spent during one technological process. Their full value increases the price of the finished product. The material elements that make up the working capital, during the production process change their natural form and physico-chemical properties. The consumer value of these resources is lost with the course of the production cycle. Working capital can be divided into three groups:
- stocks of production;
- work in progress and own semi-finished products;
- expenses that relate to future periods.
Circulation funds consist of finished goods in a warehouse or in transit, as well as cash held in current accounts or on accounts in the form of receivables. These resources are used to service the production sector.
Revolving funds of the organization during the production process go through several stages. Their movement begins with the advance of monetary sums aimed at the purchase of necessary funds. At the first stage, the process of material and technical supply of tools and objects of labor is organized . At the second stage, the means of production are consumed, and finished products are created. The third stage is characterized by the process of selling finished goods. Sources of acquisition of current assets can serve as own or borrowed funds.
Effectively used revolving funds are an important criterion in the stable functioning of a business entity. This can be achieved by rational spending of funds available to the company. If current assets are used economically, the resources released at the same time contribute to the financial strengthening of the business entity. To implement this process, it is necessary to increase the material interest of the enterprise team in increasing the efficiency of the entire production.