WORKING CAPITAL AND CURRENT ASSETS OF AN ENTERPRISE: ESSENCE, RELATION, PECULIARITIES OF FORMATION AND USE
Journal Title: Економічна стратегія і перспективи розвитку сфери торгівлі та послуг - Year 2017, Vol 1, Issue
Abstract
Scientific approaches to defining the economic essence, objective laws and principles of formation and use of working capital and current assets of an enterprise are considered and systematized in the article. It is found out that a lot of foreign and national scientists-economists equate the concept of working capital with the concept of current assets. It is substantiated that the given definitions should be distinguished by their essence, functions, classification of constituent elements because they have their intrinsic characteristics and distinctive features in the process of formation and use in the financial and economic activity of business entities. The role and place of working capital as a part of aggregate capital accumulated from own, borrowed and raised financial resources, which are the source of investment in current assets to ensure the continuity of the financial and economic activity functioning of an enterprise is substantiated. It is determined that working capital is of prime importance, because it is the source of the formation of current assets of an enterprise, mainly due to current liabilities and part of equity capital. The model of the relationship of working capital and current assets of a trading enterprise is developed, with the help of which the movement of funds is presented at the successive stages of the operation cycle of a trading enterprise: working capital formation, its investment in current assets, in particular, in commodity stocks, sales of goods to customers and the reproduction of the invested capital in the form of sales revenue on an expanded basis with value added. It was found out that the operation cycle of a trading enterprise represents the full turnover of the total amount of working capital in the process of movement of which a successive change in the forms and objects of the invested funds’ use occurs at separate stages. It is proved that the concept of current assets and working capital of an enterprise should be distinguished and considered in a dialectical relationship because they have both general and distinctive features: they have common financial sources of formation, are constantly moving and reproduced, are transferred from one form to another during economic and operation cycle, differ by their economic purpose and the role at different stages of the funds movement in the process of expanded reproduction at the microeconomic level.
Authors and Affiliations
Альона Сіфурова
Keywords
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- EP ID EP247020
- DOI 10.5281/zenodo.1109293
- Views 144
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