LONG-TERM AND PERMANENT CAPITAL MANAGEMENT FOR A SUSTAINABLE FINANCIAL STABILITY OF ENTERPRISES

Abstract

At the time of establishing a company, the owner or owners (if
more than one person establishes an enterprise) are required to put in a
certain amount of money or some other items that are assessed and reported
in terms of their financial or monetary value. The property thus entered
represents the assets of the company, while on the other hand, equity capital
is declared as permanent capital. In case of a successful business, the part
of the profit that remains in the company, after paying the income tax and
after paying the dividends to the owners, increases the owner’s capital. On
the other hand, each loss causes a decrease in one’s own capital. This aim of
this paper is to present how to manage long-term and permanent capital in
the company in order to achieve successful long-term financial stability of
the company. In addition to the introduction and the conclusion, the paper
consists of three parts: Management of permanent capital, Management of
long-term provisions and Management of long-term liabilities. The paper
presents some practical examples of book-keeping, as well as thecalculation
of coefficients, and calculation of interest.