Enterprise funds and the efficiency of their use

Enterprise funds are the set of money, resources and goods serving to organise and run the enterprise’s activity. They take three forms: money, resources (premises, equipment, raw materials, labour, energy) and goods. Money turns into resources, resources into goods through production, and when the goods are sold they return as money — this is the circular movement, and its continuous repetition is called the turnover of funds. Funds are divided into fixed and working: fixed funds (a building, a machine) take part in production for a long time, keep their material form and pass their value to output gradually; working funds (raw materials, materials) take part once and pass their whole value to output. Adding the wear of fixed funds to the cost of output is called depreciation: annual depreciation charge = value of fixed funds / service life (years), depreciation rate = 100 % / service life. Efficiency indicators: efficiency of fixed funds (capital productivity) = volume of output / value of fixed funds — the higher the better; capital intensity is its inverse: value of fixed funds / volume of output — the lower the better. Depreciation methods in tax and accounting are set by law, and here the simplest, straight-line method is used.