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Business Economics - Pokropivny SF

Chapter 5. The capital and production assets

Key concepts and terms

Capital; fixed and working capital; production assets; fixed assets; physical and economic deterioration; Feasibility aging; depreciation; reproduction of fixed assets; return on assets; the shift index of equipment operation; revolving funds; productive reserves; work in progress.

5.1. General characteristics kapitalai production assets

Essence and types of capital. The term "capital" in the literal sense means the principal amount of the funds required for the initiation and implementation of production (activity). The owner of the capital, buying goods on the market - the labor force and means of production - unites them in the labor process, and after the implementation of established products (services) is greater value than he had advanced.

Advanced capital (from the French avancer -. To pay in advance) - a sum of money which is inserted into the owner of a certain company (business) in order to obtain benefits (profits). It is spent on the purchase of capital goods and the hiring of labor. These two opposite parts of the advanced capital (cash) in economic theory called respectively constant and variable capital.

In turn, the constant capital, taking into account the strategic use and the nature of the circuit is divided into fixed and circulating.

Fixed capital - is part of the constant capital, consisting of the cost of labor and equipment (buildings, machinery, equipment) and turns over several production periods. It transfers its value to the finished product parts. The cost of equity capital is compensated by the manufacturer as the realization of finished products (goods and services).

Working capital - is that part of constant capital which is spent on the purchase on the market of objects of labor (raw materials, components) and labor workforce.

Accordingly, sources of formation of capital of the company is divided into equity and debt. Equity is created mainly due to retained earnings, ie gross profit minus taxes paid, interest on loans and dividends. It usually includes share, share and back-up funds. Loan (attracted) capital is formed on a temporary basis in the form of long-term, or (ii) short-term loans are carried out in the form of a bank loan.
Production company funds. Manufacturing of production (works, services) is carried out in the course of labor and human interaction of certain means of production. The last of their material and material composition make up production facilities of the enterprise, the totality of which is divided into fixed and current (Fig. 5.1).

Fig. 5.1

However, the means of production as a set of tools and objects of labor to productive assets can not be fully identified, which is due to two factors. Firstly, the elements working means only become productive assets since their direct use in the production process. Secondly, production facilities, unlike the means of production are extremely economic cost categories, ie. E. To productive assets are not all elements of the means of production, but only those that are excluded.

All components of productive assets has certain characteristic features, which can distinguish between fixed and circulating capital and rightly interpret the essence and significance of these economic categories in the process of reproduction.

So:

fixed assets - it is the means of labor, which are the cost and function in the production of a long time in its continued use-form, and the cost is transferred to the particular difficulty in the cost of manufactured products (for paid services) as wear parts;

revolving funds - part of the production assets in the form of a certain set of objects of labor, elements of which are entirely consumed in each production cycle, ie, change, or completely lose their natural form and transfer all their value to the cost of production (paid services)...

The economic essence and tangible content production assets are those basic characteristics that determine their importance in the implementation of the reproduction processes, functioning and development of any production. The totality of available production funds is the greatest part by the specific gravity (about 60%) of the national wealth. Fixed assets determine the nature of the material and technical base of the production sector in the various stages of its development, growth and improvement of technical equipment and production staff productivity labor. Tools, which are the most active part of fixed assets, constitute the material basis of the production capacity of the enterprise. Elements of working capital form the real substance of manufactured products (raw materials, construction materials), create the material conditions for the implementation of technological processes and production equipment (fuel and energy), raw material storage and transportation of finished and finished products (various auxiliary materials - grease, paint, packaging and m. n.).

Fig. 5.1. The composition and the relationship means proizvodstvai productive assets