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Circulating capital

Business ChurningCivil law

circulating capital: flows of value within a production organization. Includes stocks of raw material, work in process, finished goods inventories, and cash on hand needed to pay workers and suppliers before products are sold.

 


Circulating Capital
The portion of an organization's investment that is continually used and replenished in ongoing operations.

liquid capital, fixed capital, circulating capital, social capital. All types of capital are valued and can be exchanged using money. The economic return on capital is interest.
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It was preceded by another great expansion in financial ventures, made without sufficient circulating capital or adherence to conservative banking methods.

Capital is conventionally subdivided into "fixed capital" and "circulating capital," although the distinction is mainly a matter of degree of durability rather than a clear-cut difference in kind.

From volume of sales costs of the year must be deducted. Costs of circulating capital are expenses for 'production material' and for labour power, ...

Plant, machinery, and buildings are fixed capital because they earn profit without circulating further, while circulating capital, or floating capital includes raw materials, fuels, components, ...

A distinction is also made between capital stocks, or circulating capital (such as raw materials, goods in process, finished goods, and sometimes wages), and capital instruments, or fixed capital (such as machines, tools, railways, and factories).

See also: Saving, Fixed capital, Values, Banks, Cost of capital

Business ChurningCivil law

 
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