The turnover of the company is ... Money turnover of the company

Starting their own business, most organizations expect to receive in a short time the income from the sale of goods or services offered. It often happens that people involved in managing and distributing funds do not take into account that in order to receive free funds, a good turnover of goods and services is needed in a short period of time.

What is the company's turnover ?

For a coherent, income-generating work, the firm requires monetary investments. Settlements for goods, services and used assets can be carried out in cash or in a non-cash way. The term "company's money turnover" means the totality of all methods of profit making: payments for goods, settlements under credit obligations, as well as payments to employees and shareholders.

Cash is done using the available money.

Cashless settlement is made with the help of the turnover of non-cash funds at the request of the recipient from the account of the payer to present a negotiable document.

Types of money turnover

The turnover of the company is a set of processes necessary to increase the turnover. For this, various methods of interaction can be used to calculate for received goods, services or materials:

• Monetary and settlement turnover (used in the interaction of legal entities and individuals to pay bills for received goods, services with non-monetary obligations).
• Monetary turnover (applicable for the provision of services or goods on credit).
• Monetary and financial turnover (typical for material relations between the customer and the contractor).

Who can become a participant in the monetary turnover?

The turnover of the company is the interaction between organizations that participate in the circulation of money. These are the money turnover between legal entities, banking institutions, the bank and legal or natural persons, between individuals.

Most often, such interactions occur through a cashless settlement between the accounts of the customer and the performer.

Thus, the company's money turnover is a combination of all receipts for goods and services produced , as well as allocations for consumed electricity, renting premises, purchasing raw materials, and settling with shareholders.

Accounting accounts for the income and costs of production for the entire time of the company. Proceeding from this, all material values of the enterprise can be divided into active and passive assets, which play a significant role in the company's turnover. This is proved by the fact that the younger the company, the less it will have inactive assets.

What is an enterprise's assets?

Assets of the company are formed due to the work of the company and are divided into:

• Active (current funds are used to purchase raw materials, pay on current payments).
• Inactive (do not bear the financial burden and can not be useful if necessary to improve the financial condition of the firm).

If active assets appear through production, sale, receipt of payments on arrears, prepayment of the customer, as well as obtaining interest rates on long-term investments, then inactive funds are most often already on the balance sheet of the firm at the beginning of its production activities.

Most of the inactive means employees see daily - these are the working buildings, machinery, any intellectual property not used in the production process, but which appear in the process of legal activity (client base, reputation, partnerships, etc.).

What influences the turnover of money?

The turnover of a company is a combination of assets and assets that are in circulation in a certain period. Each organization should monitor the need for working capital, as it plays a significant role in optimizing work and production costs.

The company is gaining momentum and increases the margin ratio, that is, the amount of net proceeds remaining after payment for all debt obligations, payments. But we can not say that gross margin is an accurate indicator of the company's well-being.

The margin factor can only show the amount of net profit that the organization can spend on its needs in the current month. Accordingly, the company, which increases this figure by large turns, has a short turnaround time of goods (goods-buyer-money), as well as a stock of raw materials, all the time in circulation.

Thanks to the miscalculations, an experienced economist can accurately say whether the company's turnover is sufficient and whether the enterprise is liquid. Namely, how fast is the circulation of active assets and materials, and whether the company will be able to pay off existing liabilities to creditors and stay with a net income.