Equity capital is an economic object of accounting and analysis of the enterprise. Capital increase is possible with proper financial policy. Financial condition is the basis for calculating equity capital and is involved in the accounting system. Capital analysis should be carried out to identify its main components and determine changes in financial stability.
It is necessary
Enterprise with sufficient equity capital, desire to increase capital
Instructions
Step 1
The change in equity capital depends on the attracted capital and borrowed capital. For the normal functioning of the enterprise, sufficient cash capital is needed to carry out financial activities. Equity capital is determined by the total value of the property of the enterprise. The aggregate of shareholders' contributions represents the authorized capital, and the reserve capital is a guaranteed protection for creditors. With the revaluation of fixed assets and unfinished construction, an increase in the value of property occurs, which is called additional capital. Net profit is distributed among shareholders in the form of dividends or used to replenish working capital and accumulate property. The growth of equity capital depends on retained earnings, which increases every year.
Step 2
Some organizations place their profits with banks on demand deposits. A very convenient program designed specifically for legal entities in almost every bank in the country. The point is that funds can be withdrawn from the deposit account at the moment when they are needed. In the same way, the amount can be increased to the desired level. The bank monthly or 2 times a month credits the company with the interest on the deposit to the current account. To manage funds, it is better to use a client-bank, so as not to go to the bank several times a day to transfer funds.
Step 3
To increase its equity capital, a company can lease its property, accept gratuitous financial assistance, and attract investors. An increase in the rate of turnover leads to an increase in capital, but at the same time requires high labor productivity, improvement of the management system, sales and supply. Also it is necessary to shorten the production cycle and reduce the labor intensity of the product.
