What is the release of working capital

World of translation : Business
, 15:53

In our time, the state system in most countries blIsocosts to democracy, at least on paper. This means that anyone can do exactly what he wants to do, and not the fact that he will order the party. Naturally, with the collapse of the Soviet Union a huge number of its former citizens to realize themselves as private entrepreneurs. Any private enterprise, the company - it meansto achieve its goals by the owner (usually financial), the implementation of practical ideas, personal and collective employment.

It has been said the main purpose of the establishment and operation of any company is to get financial benefits well, or better to say - the profits. But doing business - it is ne simple "I made - sold". This is a whole set of activities that ensures the implementation of the company in the overall economic system and maintaining positive financial and economic indicators.

One of the performance indicators of the company is the level of its current assets - assets thatie during one period (cycle) can be converted into cash. This figure, which does not characterize the level of income that is not an indicator of long-term effectiveness, and is responsible for the current balance. In turn, to assess the cost-effectiveness of most of these current assets used by another figure - aboutborachivaemost.

What is the turnover

The turnover and the turnover ratio - is a quantitative indicator of the efficiency of use of circulating assets. It determines the actual number of revolutions of assets over a certain period of time and, therefore, determines the intensity of the formation of an assets long-term. With the concept of the turnover of funds it is closely related to the concept release of current assets.

The concept release of funds

The release of assets occurs when their turnover increases. That is, there are tools that can be without prejudice to the turnover figures USINGamb outside. Simply put, as a result of increasing turnover, the accumulation of long-lived assets, ie income or capital. In economic theory, are two separate types of release: the absolute and relative. For more details on the release of funds, visit the website.

The absolute release

This indicator occurs when real balances of current assets less than the standard indicators, or less than in the previous reporting period. Of course, with the sales volume must either be at the same level or increase. Their use depends on the the management structure of the enterprise: the centralizingovannoy system, funds are transferred up the organizational structure, and in private - are used for expansion and innovation in production.

The relative release

In the event that the growth of production and sales coincides with an increase in turnover, there is a measure of the relative heightvobozhdeniya. In this case, talk about the withdrawal of funds from the market do not have.

Author: World of translation
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