What Is a Capital Turnover?

Capital turnover refers to a cyclical capital cycle. The motive of capital is to capture the surplus value, but the surplus value must be obtained through the cyclic movement of capital, so after the industrial capital completes a cycle, it will immediately begin a new cycle. From the advance of capital in a certain form, through the production process and circulation process to the capital being multiplied and restored in the same form, it is a turnover of industrial capital. The time that the capital is in the production field is the production time of the capital. The time that the capital is in the circulation field is called the circulation time of the capital. They together constitute the turnover time of the industrial capital. ^[1]

Capital turnover

The principle of capital turnover guides us to understand and accelerate the meaning and approach of capital turnover. The principle of capital turnover explained: Accelerating capital turnover can not only avoid or reduce the causes

The sum of capital production time and circulation time. It contains the total process of one cycle of total capital value, that is, the interval from one cycle to the next cycle. Specifically, it is the circulation time that currency capital has been converted into production capital, plus the production time that production capital has been converted into commodity capital, plus the circulation time that commodity capital has been converted back to monetary capital. Capital turnover time has a great impact on the amount of prepaid capital. Shortening the turnaround time can save the amount of prepaid capital. The shorter the capital turnaround time, the faster it will re-enter the next turnaround, without having to invest additional prepaid capital during the waiting period where the turnaround period is not over. Capital turnover time also has a great impact on the increase of capital value. Several capitals with the same rate of surplus value, of which the turnover time is short, can obtain the same amount of surplus value faster. Therefore, the total amount of residual value obtained in a unit time (one year or one month) is greater. For example, two companies with the same capital and surplus value rate have different capital turnover times, one is 3 months and the other is 30 months. In the unit time, the total surplus value obtained by the former is equivalent to ten times the latter. . Therefore, shortening the capital turnover time is an important means to promote capital value proliferation.

The length of capital turnover time is determined by the length of production time and circulation time. In terms of production, it depends on the length of labor time and the existence of time affected by natural forces. Generally speaking, the shipbuilding industry has longer production time than the textile industry. . In addition, the length of production time depends on the level of technical equipment, management and labor productivity. From the perspective of circulation, it depends on the origin of the raw material fuel and the distance of the sales market. The closer the distance, the more time can be saved; it also depends on the advanced level of transportation, communication equipment and information network systems. The more you save on turnaround time. After the Second World War, especially in recent years, with the development of the new scientific and technological revolution, computers, robots, modern telecommunications, container handling, and information technology have provided material conditions for shortening production time and circulation time, thereby Reduced capital turnaround time. But the basic contradiction of capitalism hinders market sales, delays the circulation time, and is not conducive to shortening the turnover time.