Real capital is physical means. They consist of working capital and fixed capital. What role does it play in the economy and what are the features of the analysis of real capital in it? We will talk more about this and much more in our article.
Fixed and working capital
Fixed capital and its funds are a fundamental component in all branches of real capital. At the beginning of 2011 in Russia from 122.5 trillion rubles. all economic assets 93 trillion. rub. accounted for the fixed assets.
Fixed capital funds cover short-term facilities with a service life of not more than one year. These include material objects such as buildings, structures, housing, transmission devices, equipment, machinery, machines, tools and equipment, means of transportation, perennial plantations and livestock, rental property rights and intellectual property. The latter include logos, trademarks, licenses, etc.
Working capital - this is the second part of real capital, which consists of tangible current assets. These include stocks associated with production. And also the work in progress, finished products and second-hand goods, ready for re-sale.
Working capital and finance, profit
There is also working capital in finance. These are settlement funds of suppliers and buyers, for example, accounts receivable, which include all kinds of loans and installments, as well as deferred expenses. For example, advances to suppliers, cash on hand. If we add the sum of real and financial capital, then we get a certain amount. This is the accounting definition of all current assets.
Real equity brings its owners various forms of profit:
- clean - to firms;
- Royalty to intellectual property owners.
Equity items are mainly sold in investment markets.
Analysis and nuances of fixed capital
There are two main aspects of the above analysis. Firstly, it is its dynamics. For example, the price of fixed assets of the Russian Federation for 1981-1990. rose by 72%, and in 1991–2000 only 6%. And then it was the merit of the completion of previously begun facilities. But in 2001–2010. fixed assets grew by 22%, although the pace was significantly reduced.
Secondly, the aspect is the study of the nuances of fixed capital. The analysis is carried out according to the methods of activity in the economy, types of ownership, implementation and substitution of fixed assets. An analysis of the sectors of fixed assets in 2011 shows that all funds were concentrated in transport and communications (26.5% of the total), housing and utilities (24%), and industrial sectors (26%, together with utilities).
An analysis of the key funds of the real capital market of the Russian Federation by ownership forms shows the results of general privatization of the end of the last century:
- in 1990, 91% of the total fixed assets are owned by the state;
- in 1996 - 28%;
- in 2008 - 22%;
- in 2011 already 47.9%.
Fixed capital ratios
The exploitation of real capital and real assets is reflected in the renewal of fixed assets. This is the percentage of fixed assets at the beginning of the year to their balance at the end of the year. Funds need to be valued at their nominal carrying value, that is, at prices including depreciation.
Change in the magnitude of the coefficients
If we compare the value of this coefficient over several years, then we can confidently say whether the input process of fixed assets has accelerated or decelerated. For example, in the Russian Federation, the percentage of renewal was:
- in 1980, 9.1%;
- in 1990 - 6.3%;
- in 2000 the level fell to 1.8%;
- in 2001–2011 remained stable at the level of 3-4%.
It is impossible to imagine that fixed assets will be updated without a disposal rate. This is a kind of percentage ratio of funds liquidated during the year to their availability at the beginning of the next billing period, calculated at the nominal cost of accounting. The coefficient of disposal of fixed assets in our country:
- in 1980 was 1.9%;
- in 1990 - 2.4%;
- Until today, it has been holding at about 1%.
The average age of fixed assets
Summing up the processes of input and disposal of fixed assets of real capital of enterprises is impossible without such a thing as average age. It should be noted that homes, structures and buildings can be maintained in good condition for centuries through overhaul and redecoration. But equipment, cars, inventory, tools and vehicles may be in good condition, but morally obsolete.
There are two types of fixed assets - active (inventory and tools) and passive (buildings and structures). More important is the age and deterioration of active funds, since modern technology plays a significant role in production. Unfortunately, it is impossible to calculate the average age of fixed assets in Russia.
But you can calculate the age of industrial facilities. For example, the average age of industrial buildings in Russia in 2008 was 26 years, structures - 22 years, and machinery and industrial equipment - 14 years.
Depreciation and depreciation of fixed assets
Due to the nature of statistical research in our country, the concept of “depreciation rate” is used to calculate the depreciation of fixed assets in real and financial capital. In Russia, the following dynamics were observed:
- in 1990, it amounted to 35.1%;
- in 2000 - 39.4%;
- in 2008 - 45.3%;
- in 2010 - 47.1%.
The degree of depreciation of fixed assets is calculated not so much from the physical as from the moral side. The availability of modern tools for facilitating labor is much more important for capital than new buildings.
Depreciation - a change in the price of fixed capital in the process of its use in production. As well as the transfer of changes in this price to the finished product as costs of production activities.
This is actually a partial annual write-off of the value of fixed capital based on the prices of means of production established by the state. From depreciation deductions, a fund is formed that serves to compensate for the depreciation of capital. What is noteworthy, entrepreneurs are interested in increasing the depreciation fund.
Firstly, it is not taxed. Secondly, depreciation fund funds can be used for investment. The state is also interested in rapid depreciation, so its process is often accelerated by the enterprises themselves. Production capital is usually written off over several years. This happens in order to update them due to depreciation deductions.
In today's Russia, depreciation is a rather noticeable, but far from a leading source of financial investment in fixed assets. Their share in 2010 was only 20.5%.
Working capital analysis
It is worth considering that working capital confirms its name. He performs the turnover in the economy faster than the main. And the contribution of working capital to the economy is much greater than that of the main one. This is because depreciation transfers the cost of fixed capital to finished products over several years. While working capital transfers this value for several months.
In our country in 2007, the share of industrial processing output on its depreciation investments accounted for only 3%. And the remaining costs, which form mainly working capital (raw materials), accounted for 73%. Labor costs accounted for 12%, while other expenses related to working capital also took about 12%.