The Golden Rule of Economics
The Golden Rule of Economics
In economics, as in any otherscientific discipline, their own laws and rules. Therefore, the activity of any enterprise can be objectively assessed according to certain criteria characterizing its business activity. For such an assessment, the "golden rule of the economy" is often used.
Business activity of the enterprise
Stable financial position, highthe creditworthiness of the enterprise, its stable position on the market is largely determined by its business activity. It is characterized by many specific indicators, which can be judged on the qualitative and quantitative criteria of its activities: the volume of sales of products and services, the breadth of sales markets, profits, the value of net assets. The business activity of the enterprise is also characterized by such indicators as the turnover rate of its funds, good business reputation, the degree of fulfillment of the plan according to the basic criteria for the efficiency of its economic activity, the level of efficiency of using available resources and stable economic growth. Of all these criteria, using well-known economic laws with confidence to judge the business activity of the enterprise. To do this, in the world practice, the regularity, called "the golden rule of the economy", is most often used.What is the essence of the "golden rule of the economy"
Any enterprise, no matter whatit produces - products or services, operates in a closed cycle: the production of products and services - their sale - the receipt of profits - the expansion of production of products and services. "Golden rule of the economy" allows you to assess the economic potential of the enterprise by the three criteria that characterize this cycle. It uses indicators such as: - Tpp - the growth rate of balance sheet profit, - Tv - the growth of revenue (sales volume), - Tk - the growth rate of the amount of assets consisting of the core and working capital of the enterprise. The business activity and efficiency of the enterprise is the ratio: Тбп> Тв> Тк> 100%, meaning that the economic potential of the given enterprise has increased in comparison with the previous period. When assessing the business activity of an enterprise, it should be borne in mind that the period for which an estimate is made must be sufficiently large, since a part of the profit can be invested not in renewable production, but, for example, in investment or in the development of a new field of activity that will pay off only after It's time. It is easiest to verify the correctness of this pattern, considering the activities of small industries, but the existing economic experience has already shown that it is unerringly applicable to the activities of any company, regardless of the volume of its turnover.
