Introduction
Chapter 1. Theoretical and organizational foundations of the analysis of working capital turnover
1.1. Concept, composition and classification of working capital
1.2. Purpose of working capital and its role in production
1.3. Factors for increasing the efficiency of use and turnover of working capital
1.4. Goals, objectives and information sources of working capital analysis
Chapter 2. Methodological approaches to the analysis of working capital turnover
2.1. Methods for analyzing the level of dynamics and structure of working capital
2.2. Methodology for analyzing turnover and profitability of an organization's working capital
2.3. Factor analysis of working capital turnover indicators
Chapter 3. Analysis of working capital of LLC "-"
3.1. Analysis of the dynamics and structure of current assets using horizontal and vertical analysis techniques
3.2. Analysis of turnover indicators
3.3. Factor analysis of working capital turnover indicators
Conclusion
Bibliography
Introduction
Working capital is one of the components of the enterprise's property. The condition and efficiency of their use is one of the main conditions for its successful activities. The development of market relations determines new conditions for their organization. High inflation, non-payments and other crisis phenomena force enterprises to change their policies in relation to current assets, look for new sources of replenishment, and study the problem of the efficiency of their use.
In the system of measures to improve the efficiency of social production, an important place is occupied by the issues of rational use of working capital in all spheres of human activity, especially in industry.
The purpose of analyzing accounting (financial) statements from the user's perspective is to review and evaluate the information available in the statements in order to obtain reliable conclusions about the past state of the enterprise in order to predict its viability in the future.
As a result of the analysis of accounting (financial) statements, the most important characteristics of the enterprise are also determined, which indicate, in particular, its success or the threat of bankruptcy.
For different users, the analysis of accounting (financial) statements in terms of the scale of its implementation depends on the specific goal set. At the same time, the nature of the analysis and direction of work when analyzing accounting (financial) statements may be different.
Carrying out an analysis of working capital is the most important area of analysis of financial statements, since changes in the dynamics and structure of current assets determine the solvency of the enterprise, its production capabilities, and the demand for this enterprise in the market.
Working capital turnover is one of the most important indicators characterizing the intensity of use of an enterprise's working capital and its business activity. The financial condition of the organization directly depends on how quickly funds invested in current assets turn into real money. Thus, an increase in non-payments complicates the rhythm of the organization’s activities and leads to an increase in accounts receivable; excessive diversion of funds into inventories, work in progress, and finished products leads to the “death” of resources and inefficient use of working capital.
In this thesis, working capital is analyzed using three methods:
Analysis of the dynamics, structure and profitability of working capital;
Calculation of analytical indicators (turnover ratios);
Factor analysis of turnover ratios;
The purpose of writing the thesis is to analyze the current assets of LLC “-” and develop recommendations for their optimization, determine the level of efficiency of the enterprise’s use of the current assets at its disposal.
The objectives of the thesis include:
· Study of the theoretical and organizational foundations of working capital turnover;
· Studying the methodological foundations and approaches to the analysis of working capital turnover;
· Direct analysis of the working capital of the organization under study (LLC “-”) with conclusions about its results and recommendations for optimization.
The first chapter of this thesis covers the theoretical and organizational aspects of working capital turnover. The concept of working capital, its composition and classification, purpose and role in production, as well as the efficiency of using working capital and ways to increase it are given. The main goals, objectives and information sources of working capital analysis are identified.
The third chapter directly analyzes the working capital of LLC “-”. It includes: horizontal, vertical analysis and analysis of profitability of working capital; analysis of turnover indicators; factor analysis of working capital turnover indicators.
The thesis uses the works of such authors as: Selezneva N.N., Ionova A.F., Gilyarovskaya L.T., D.V. Lysenko, D.A. Endovitsky, Markaryan E.A., Lyubushin N.P., Leshcheva V.B., Dyakova V.G., T.G. Vakulenko, L.F. Fomina, I.M. Lokhanin and others.
ChapterI. Theoretical and organizational foundations of working capital turnover
1.1. Concept, composition and classification of working capital
Working capital generally refers to the assets (funds) that will be converted into cash in the normal course of business of the firm within a period not exceeding one year.
Working capital of an enterprise represents the mobile assets of the enterprise, which are cash or can be converted into it within a year or one production cycle.
Working capital is financial resources invested in objects that are used by the enterprise either within one reproduction cycle or within a relatively short calendar period (usually no more than 1 year).
These funds constantly circulate in the process of economic activity, changing their form from monetary to commodity and vice versa. Thus, they form the bulk of production costs. On the other hand, they are a guarantor of the enterprise’s liquidity, that is, its ability to pay its obligations. The composition of working capital is understood as a set of elements that form circulating production assets and circulation funds, that is, their placement into individual elements.
The structure of working capital represents the ratio of individual elements of working production assets and circulation funds, that is, it shows the share of each element in the total amount of working capital.
The predominant part of working production assets consists of objects of labor - raw materials, basic and auxiliary materials, purchased semi-finished products, fuel and fuel, containers and packaging materials. In addition, working production assets also include some tools - low-value and wear-out items (IBP), tools, special devices, replacement equipment, inventory, spare parts for routine repairs, special clothing and footwear. These tools last less than a year or have cost restrictions. Limits on the value of funds in circulation change periodically, which is associated with ongoing revaluations of fixed assets and the period of their acquisition.
In addition, in enterprises these tools often number in the thousands, which makes it technically difficult to record their wear and tear. Therefore, in practice, they are classified not as fixed assets, but as working capital.
The listed items and tools of labor constitute a group of circulating production assets - production inventories. In addition to them, working capital includes work in progress and deferred expenses.
The main purpose of funds advanced to working capital assets is to ensure a continuous and rhythmic production process.
In addition to circulating production assets, circulation funds are formed at enterprises. These include: finished products in warehouse; goods shipped; cash in the cash register of the enterprise and in bank accounts; accounts receivable; funds in other settlements.
The main purpose of circulation funds is to provide resources for the circulation process.
The composition and structure of working capital is not the same in different sectors and sub-sectors of the economy. They are determined by many factors of production, economic and organizational nature.
Thus, in mechanical engineering, where the production cycle is long, the proportion of work in progress is high. At light and food industry enterprises, the main focus is on raw materials (for example, in the textile industry). At the same time, in the food industry (for example, dairy, butter and cheese) there are relatively high stocks of auxiliary materials, containers, and finished products.
In enterprises where a large number of tools, fixtures, and devices are used, the proportion of low-value and wearable items is high (for example, in mechanical engineering and metalworking).
In the extractive industries there are practically no reserves of raw materials and basic materials, but the share of future expenses is high. In addition, for example, in the oil industry, an increased share is made up of auxiliary materials and spare parts for the repair of basic equipment.
The amount of finished products, goods shipped, and accounts receivable is influenced by factors such as the conditions for selling products, the forms and status of accounts.
The main feature of current assets is liquidity, i.e. the speed at which an element of an asset is converted into cash.
In order of decreasing liquidity, working capital can be classified:
1. Cash. They are the most liquid element of current assets. These include cash in hand, funds in settlement and currency and other bank accounts. They are the most important indicator of the organization's solvency.
2. Marketable Securities: Companies often invest excess cash in certificates of deposit, bills accepted by banks, government securities or high-quality securities of large companies, and their own shares. Such securities must be easily marketable, have a short circulation period, and eliminate the risk of loss of principal. Shares of other companies are not considered current assets because: the value of shares is subject to significant fluctuations, shares represent ownership of the enterprise (not assets), and shareholders receive compensation only after satisfying the claims of creditors. Therefore, shares are classified as non-current assets (except for shares of one’s own company).
3. Accounts receivable. Sales of products on credit before receipt of the corresponding amounts are reflected in the balance sheet as accounts receivable. Liquidity depends on the financial condition of debtors and their business reputation.
4. Bills receivable. Unpaid bills under special agreements to pay for the supply of products and services.
5. Material reserves. These include finished products, inventories of raw materials, and work in progress.
6. Other current assets. These include short-term investments in shares of other enterprises and life insurance premiums.
Current assets can also be classified according to the degree of risk of loss of liquidity (see table 1.).
Table 1.
|
degree of risk |
working capital groups |
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1. Minimal risk |
cash, easily marketable short-term securities |
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2. Low risk |
accounts receivable from enterprises with a normal financial position, stocks of raw materials and materials (excluding stale ones), finished products in the warehouse (mass consumption and in demand) |
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3. Medium risk |
products for industrial and technical purposes, work in progress, deferred expenses |
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4. High risk |
Remote control of enterprises with a difficult financial situation, finished products that are no longer in use; stale inventories, other illiquid assets |
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Working capital is classified according to its form (by place and role in the reproduction process):
1) production or material (inventories, work in progress, finished goods);
2) payment (cash, etc.).
Consideration of the composition and structure of working capital allows us to touch upon such an important problem of organizing working capital as their rational placement between the spheres of production and circulation.
Establishing the optimal ratio of working capital in production and circulation is important for providing funds for the implementation of the production program, and is also one of the main factors in the efficiency of using working capital.
According to the degree of planning, working capital is divided into standardized and non-standardized. Tangible current assets are standardized, but payment assets are not standardized.
According to the sources of formation, working capital is divided into own, borrowed and attracted.
In modern economic conditions, enterprises are given broad rights to dispose of working capital. Working capital is at the disposal of the enterprise and cannot be withdrawn. Enterprises can sell them and transfer them to other enterprises, organizations, institutions, citizens, rent them out, provide them for temporary use (except for those that are not owned or used by enterprises).
An important problem at the enterprise is ensuring the safety of working capital. In the process of financial planning, it is important to determine the possible presence of a surplus or shortage of working capital at the beginning of the planning period. To do this, the sum of the expected (actual) availability of the enterprise's own working capital at the beginning of the planning period is compiled with its total need for working capital.
If the planned need exceeds the amount of the enterprise's own working capital, a shortage of own working capital arises. Enterprises that have allowed the formation of a shortage of working capital can fulfill it at their own expense and temporarily at the expense of borrowed funds.
If the ratio is the opposite, a surplus of own funds arises, which can serve as a source of financing for the increase in working capital.
A lack of own working capital may arise due to a number of reasons, depending and not depending on the activities of the enterprise. An enterprise may not ensure the safety of its own working capital, that is, lose a certain amount, allowing excess losses, illegal diversion of working capital, for example, for the needs of capital construction, or loss of profit.
The economic conditions in which enterprises operate have a significant impact on the state of working capital. An increase in prices for purchased inventory leads to the formation of enterprises with a large shortage of their own working capital. One of the sources of its replenishment is a bank loan, which in conditions of inflation is provided at high interest rates.
The financial policy pursued by the state can hinder or stimulate the normal production and financial activities of enterprises, including the rational use of working capital. An important role in this regard belongs to the tax policy of the state. Thus, the attribution of a number of taxes to the cost of products (works, services), the specifics of paying VAT to the budget, and advance payments of income tax lead to the diversion of working capital of enterprises to non-productive expenses. This forces enterprises to resort to loans at high interest rates, to look for unplanned sources of funds, and to violate financial discipline. The diversion of working capital leads to a slowdown in their turnover, reduces the efficiency of the enterprise, and worsens its financial condition.
The organization of an enterprise's working capital necessarily includes systematic monitoring of their safety and efficient use through audits and surveys based on statistical data, operational and accounting reporting.
In the Balance Sheet (Form No. 1), in accordance with Order of the Ministry of Finance of the Russian Federation dated July 22, 2003 N 67n “On Forms of Accounting Reports of Organizations,” the elements of current assets are shown in order of increasing liquidity (see Table 2.)
Table 2.
Current assets
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CURRENT ASSETS |
Line code |
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including: |
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animals for growing and fattening |
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costs in work in progress |
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finished products and goods for |
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goods shipped |
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Future expenses |
|
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other inventories and costs |
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Value added tax on |
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including buyers and customers |
|
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Accounts receivable (payments for |
|
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including buyers and customers |
|
|
Short-term financial investments |
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Cash |
|
|
Other current assets |
1.2. Purpose of working capital and its role in production
To carry out a continuous production process, enterprises form current assets. They are necessary to create inventories, pay current bills in work in progress until the end of the production cycle.
The current assets of an enterprise perform two functions: production and settlement. Performing a production function, current assets maintain the continuity of the production process and transfer their value to the manufactured product. Upon completion of production, current assets pass into the sphere of circulation in the form of circulation funds, where they perform a second function, consisting in completing the circuit and transforming current assets from a commodity form into money.
The rhythm, coherence and high performance of an enterprise largely depend on its provision with current assets. A lack of funds advanced for the purchase of inventories can lead to a reduction in production and failure to fulfill the production program. Excessive diversion of funds into reserves that exceed the actual need leads to the deadening of resources and their ineffective use.
Since current assets include both material and monetary resources, not only the process of material production, but also the financial stability of the enterprise depends on their organization and efficient use.
To organize and ensure cash settlements, current assets can be located sequentially in several states (see diagram 1). At the first stage, materials for production are purchased and inventories are created. At the second stage, inventories are transferred to production, and the costs of labor, energy, etc. are added to them. and the next element of current assets is formed - work in progress. Since enterprises do not always use only their own funds to finance and supply production, there is an intermediate stage between 1 and 2 - Lenders. At the 3rd stage, in addition to completing the production cycle, work in progress is transformed into finished products, which are sold to the consumer. At the 4th stage, finished products are converted into cash. Between 3 and 4 there is also an intermediate stage - Debtors due to the sale of products on credit. Next, raw materials and materials are purchased again and a new production cycle begins (see diagram 1).
Stages of functioning of working capital in the production process
DS® Kr. ® MZ ® WIP ® GP ® Dt.
In practice, there is a separate turnover of all elements of current assets, the turnover periods of which do not coincide. The following cycles of working capital turnover are distinguished by elements (see diagram 2):
Turnover cycles by elements of working capital
· Financial cycle - the period of time during which the company’s own working capital participates in the operating cycle.
· The operating cycle characterizes the period of turnover of the total amount of working capital of the enterprise.
Since the company usually pays supplier invoices with a time delay, the financial cycle is less than the operating cycle for the average period of accounts payable turnover
Graphically, this can be expressed in the fact that the financial cycle begins after the end of the accounts payable turnover period, but it should not be understood that in some cases the financial cycle begins later than the production cycle.
Reducing the production cycle increases the turnover of working capital as a whole and is carried out by the following actions:
· Reduced inventory turnover period
· Reducing the turnover period of work in progress
· Reducing the turnover period of finished products
The structure of working capital is determined by the ratio of their individual elements and reflects the specifics of the operating cycle, as well as what part of current assets is financed from own funds and long-term loans, and what part is financed from short-term loans.
1.3. Efficiency of use and turnover of working capital and ways to increase them
In the system of measures aimed at increasing the efficiency of the enterprise and strengthening its financial condition, issues of rational use of working capital occupy an important place. The problem of improving the use of working capital has become even more urgent in the conditions of the formation of market relations. The interests of the enterprise require full responsibility for the results of its production and economic activities. Since the financial position of enterprises is directly dependent on the state of working capital and involves the comparison of costs with the results of economic activity and reimbursement of costs with their own funds, enterprises are interested in the rational organization of working capital - organizing their movement with the minimum possible amount to obtain the greatest economic effect.
The efficiency of using working capital of enterprises is affected by many factors, often in opposite directions (see diagram 1). Based on the breadth of influence and degree of controllability, factors can be conditionally grouped into three groups: general economic, organizational and related to technical progress.
General economic factors include: changes in the value of trade turnover and its structure; placement of productive forces; dynamics of the productivity of social labor employed in the sphere of commodity circulation and in the industries serving it; development of economic accounting.
The group of economic and organizational factors includes: changes in the size of trading enterprises and their specialization: the introduction of new methods of trade, etc. Factors associated with technical progress are: changes in technology and equipment used in industries serving trade (transport, communications, utilities ); automation of trading processes.
The efficiency of using working capital and the acceleration of their turnover are influenced by factors that both increase their value and decrease them.
Factors that increase the amount of working capital include: improving the quality of trade services, expanding the network of stores in areas of new buildings, changing the structure of trade turnover towards increasing the share of goods with slow turnover, etc. The reduction of working capital is facilitated by: saving material and financial resources; widespread introduction of the principles of economic accounting into the activities of trading enterprises (associations).
Factors influencing the efficiency of using working capital
Factors that determine the amount of working capital can be objective, i.e. independent of the activities of a given enterprise, and subjective. Subjective ones include, for example, the rational use of working capital, implementation of the turnover plan, the forms of service used, compliance with credit and financial discipline.
The turnover of working capital is their movement in the process of reproduction, their sequential transition from one form to another. It is characterized by the time during which the funds advanced to working capital and the means of circulation make a full turnover, or the speed, which is expressed by the number of full turns in a specified time (year, quarter, month).
Working capital turnover refers to the duration of one complete circulation of funds from the moment working capital is converted in cash into inventory until the release of finished products and their sale. The circulation of funds is completed by crediting the proceeds to the enterprise account.
The turnover of working capital is not the same at enterprises of both one and different sectors of the economy, which depends on the organization of production and sales of products, the placement of working capital and other factors. Thus, in heavy engineering with a long production cycle, the turnover time is greatest; working capital turns over faster in the food and mining industries.
The system of general and partial indicators of turnover of working capital is based on two interrelated financial ratios: the turnover ratio and the duration of one turnover, which characterize the efficiency of using working capital, and in particular the turnover and duration of turnover of inventories, the turnover and maturity of receivables, etc. .
In their content, turnover indicators are direct indicators of resource-type efficiency, i.e. characterizing the ratio of effect to costs. The initial financial indicator – sales revenue – is used as an effect. Costs are expressed quantitatively through indicators of advanced resources, which gives grounds to attribute turnover indicators to the resource type. In other words, turnover is characterized by a comparison of indicators of production volume and the amount of advanced working capital.
The length of time funds remain in circulation is influenced by external and internal factors.
External factors include: the scope of the organization’s activities; industry affiliation; scale of the organization; the economic situation in the country and the associated business conditions.
Internal factors - the organization’s pricing policy, asset structure, inventory valuation methodology.
Reserves and ways to accelerate the turnover of working capital in a generalized form depend on two factors: the volume of production, sales and the size of working capital. To speed up turnover, you need to:
· improve production and sales, normalize the placement of working capital;
· Completely and rhythmically implement business plans;
· improve the organization of production and sales, introduce progressive forms and methods;
· improve settlements with suppliers and buyers;
· improve claims work;
· accelerate the turnover of funds by improving the collection of revenue, strictly limiting cash balances at the enterprise's cash desks, on the way, in a bank account;
· minimize stocks of household materials, low-value and wearable items, equipment, workwear in the warehouse, reduce accountable amounts, deferred expenses;
· prevent the growth of accounts receivable.
The efficiency of using working capital of enterprises, therefore, depends primarily on the ability to manage them, improve the organization of production and sales, and increase the level of commercial and financial work.
Particular attention is paid to studying the causes of identified deviations for certain types of current assets and developing measures to optimize them. An increase in inventory may be the result of shortcomings in the organization of trade, advertising, studying customer demand, other marketing activities, and the presence of unclaimed and slow-moving industries.
Large cash balances on hand and in transit arise due to irregular sales development, untimely delivery of proceeds to the bank, unused funds and other violations of cash discipline. Excessive balances of other inventory items are the result of the presence or acquisition of excess and unnecessary materials, raw materials, fuel, low-value and wearable items, and other material assets. It is possible to reduce inventories of goods, materials, raw materials, and fuel to optimal sizes through their wholesale sales or barter transactions, uniform and frequent delivery. The normalization of balances of goods and cash at the cash register and on the way is facilitated by the rhythmic development of trade turnover.
The minimum required amounts of funds should be kept in bank accounts, and all available balances should be transferred to early repayment of received loans, invested in securities, and provided loans to legal entities and individuals. When overspending of special purpose funds and reserves occurs, the main attention is paid to developing measures to repay and prevent it.
1.4. Goals, objectives and information sources of working capital analysis
The main goal of the analysis is the timely identification and elimination of shortcomings in working capital management and finding reserves for increasing the intensity and efficiency of its use. And also: identification of factors influencing turnover indicators and the duration of one period, quantitative measurement of their influence; determining the influence of working capital turnover on the financial condition of the enterprise
The financial position of an enterprise, its liquidity and solvency directly depend on how quickly funds invested in assets turn into real money. This influence is explained by the fact that the speed of funds turnover is associated with:
· The minimum required amount of advanced (involved) capital and related cash payments (interest on bank loans, dividends on shares, etc.);
· The need for additional sources of financing and payment for them;
· The amount of costs associated with the ownership of inventory and their storage;
· Amount of taxes paid, etc.;
The current expenditure of funds and their receipts, as a rule, do not coincide in time, as a result, the enterprise has a need for more or less financing in order to maintain solvency. The lower the turnover rate of current assets, the greater the need for financing.
External financing is expensive and has certain restrictive conditions. Own sources of capital increase are limited primarily by the ability to obtain the necessary profit. Thus, by managing working capital, the company is able to depend less on external sources of funds and increase its liquidity. Therefore, management of current assets is considered as one of the ways to meet the need for capital.
For the purposes of managing current assets, indicators of their turnover and factor analysis of turnover indicators are used, although they are more likely to confirm a specific opinion than a fundamental argument for making a management decision.
Since working capital includes both material and monetary resources, not only the process of material production, but also the financial stability of the enterprise depends on their organization and efficiency of use.
Working capital analysis allows you to:
· assess the efficiency of resource use in the operational activities of the enterprise;
· determine the liquidity of the enterprise’s balance sheet, that is, the ability to repay short-term obligations in a timely manner;
· find out what the enterprise’s own working capital is invested in during the financial cycle.
The amount and structure of working capital must correspond to the needs of the enterprise, which are reflected in the budget, while current assets must be minimal, but sufficient for the successful and uninterrupted operation of the enterprise.
The main tasks of working capital analysis:
· study of changes in the composition and structure of working capital;
· grouping of working capital according to main characteristics;
· identification of the main sources of working capital formation;
· determination of the main indicators of the efficiency of using working capital.
The objectives of a comprehensive economic analysis of the state and use of the organization’s working capital are:
1. Determination of the volume of working capital necessary to ensure the continuity of the organization’s economic activities;
2.
Checking the compliance of inventories of material assets with established standards and identifying excess and unnecessary materials in the production inventories of the organization;
3. Ensuring the safety of working capital, i.e. identifying and minimizing losses of working capital;
4. Ensuring the use of working capital for its intended purpose;
5. Determining the influence of the organization of material and technical supply and the complete use of material resources on the most important indicators of the organization’s performance (volume of production, cost, labor productivity, etc.);
6. Justification of the effectiveness of the use of working capital by accelerating their turnover and conditional release from circulation;
7. Justification of the optimal need for material resources;
8. Identification of reserves for increasing the efficiency of using working capital.
System of comprehensive economic analysis and assessment of the efficiency of using working capital
The totality of the conditions and efficiency of use of working capital studied in the process of analysis provides a comprehensive description of the condition and efficiency of their use.
The main source of data for analyzing the working capital of an enterprise is the balance sheet (form No. 1) and the Profit and Loss Statement (form No. 2).
The balance sheet characterizes the composition, placement and purpose of the enterprise's funds as of a certain date. The balance sheet has the form of a table and consists of two parts - assets and liabilities. The asset shows the composition, placement and use of funds, grouped depending on their functional role in the economy.
The profit and loss statement contains information about the financial results of the enterprise (profit), as the effect of the use of working capital.
Sources of information for analyzing working capital turnover are of an accounting nature, i.e. This is the data that contains accounting documents. These include the balance sheet (form No. 1) and the profit and loss statement (form No. 2), approved by order of the Ministry of Finance of the Russian Federation dated July 22, 2003 No. 67n.
There are certain requirements for the source information. Among the most important are relevance, reliability, comparability, rationality and meaningfulness. Relevance of accounting information means its timeliness, value, and usefulness for evaluating results and forecasting. The reliability of information is characterized by truthfulness, compliance with regulations and internal business regulations, neutrality, verifiability and transparency, prudence - reflection of expenses and losses before income and profits. Rationality of economic information presupposes its sufficiency, efficiency and the absence of unnecessary data.
An important step in the analysis is the preparation of information, which includes checking the data, ensuring their comparability, and simplifying numerical information.
First of all, the information collected for analysis must be checked for quality. The check is carried out on both sides. Firstly, the analyst checks how complete the data that contains reports, tables and other documents is, and whether they are formatted correctly. The correctness of arithmetic calculations, as well as the consistency of the indicators given in different reports and tables, must be checked.
Secondly, all data involved in the analysis is checked on its merits, during which it is determined to what extent this or that indicator corresponds to reality. The means of this check are both logical comprehension of the data and checking the state of accounting, the mutual consistency and validity of indicators from different sources.
The analysis will be much less labor-intensive if comparability of indicators is ensured. To do this, all numerical information, after checking its good quality, is brought into a comparable form, using methods of neutralizing the impact of cost, volume, quality and structural factors by bringing them to a single basis, as well as the use of average and relative values, correction factors, conversion methods, etc.
Let's take a closer look at the sources of information for analyzing the turnover of current assets.
Form No. 1 – balance sheet – characterizes the financial position of the organization as of the reporting date. Data for the purposes of our analysis, i.e. information on the state of working capital, as well as their elements: inventories, settlements with debtors, short-term financial investments and cash are reflected in section II of the balance sheet.
The “Inventories” subsection contains the bulk of the enterprise’s current assets, or rather assets of a material nature that are directly included in the production and technological process. The following are reflected in the financial statements as part of inventories: finished goods, work in progress, raw materials and materials, low-value and wearable items and shipped goods.
This item can constitute a significant share not only in the composition of working capital, but also in the assets of the enterprise as a whole, which may indicate the difficulties of the enterprise with the sale of its products, violation of production technology and the choice of ineffective sales methods, the specifics of a particular production associated, for example, with the duration of the production cycle or its seasonal cyclicity.
Accounts receivable is the next element of working capital, which represents the enterprise’s claims in relation to other enterprises, organizations, and clients to receive funds for the supply of goods or provision of services. In the balance sheet, accounts receivable are reflected in two groups of items depending on the timing of expected payments: accounts receivable, payments for which are expected within 12 months after the reporting date, and accounts receivable, payments for which are expected more than 12 months after the reporting date
There are two types of accounts receivable - normal and overdue. Normal accounts receivable arise as a result of the forms of payment used for products supplied, services provided, work performed and are not a consequence of shortcomings in the operation of the enterprise. Overdue accounts receivable arise as a result of unsatisfactory operation of the enterprise, for example, when recipients of products violate payment terms, when shortages, waste and theft of inventory and cash are identified. The presence of large accounts receivable should be considered as a factor that negatively affects the financial position of the enterprise, and its growth in dynamics indicates a deterioration in the financial position.
Short-term financial investments are liquid securities that generate income for an enterprise in the form of interest or dividends. They can be easily sold on the securities market and converted into cash.
The group of cash items reflects the balance of cash on hand, in current accounts and foreign currency accounts in banks and monetary documents. Cash represents a specific type of enterprise assets, which are a universal means of payment for attracting any resources to the enterprise. In terms of its content, the item “cash” represents the amount of money remaining in the bank’s current account (demand deposit) in national and foreign currency, as well as a certain amount of cash stored in the enterprise’s cash desk on the date of the balance sheet.
The article other current assets shows amounts that are not reflected in other articles of Section II of the balance sheet.
Form No. 2 - profit and loss statement - contains a comparison of the amounts of all income of the enterprise from the sale of goods, provision of services, as well as income and receipts from other types of activities with the amount of all expenses incurred by the enterprise to maintain its activities for the period from the beginning of the year. As part of the analysis of working capital turnover, information from the profit and loss statement on revenue (net) from the sale of goods, products, works, services (less VAT, excise taxes and similar mandatory payments) is used.
In addition to the above-mentioned forms of external reporting, information from analytical accounting is also used to analyze the turnover of receivables: data from order journals or statements replacing them, accounting for settlements with buyers and customers, with suppliers for advances issued, accountable persons, and with other debtors.
ChapterII. Methodological foundations and approaches to the analysis of working capital turnover
2.1. Methods for analyzing the level of dynamics and structure of working capital
Horizontal analysis of current assets is the study and comparison of each indicator of current assets with the previous period in order to assess absolute and relative changes. Horizontal analysis is based on three analytical procedures:
Aggregation of balance sheet indicators into an analytical balance sheet and calculation of absolute values of aggregated items. For example, undeciphered items: inventories, cash, or all accounts receivable (long-term and short-term).
Calculation of analytical indicators for each consolidated or regular item: absolute and relative changes in indicators, basic and chain growth rates and increments, depending on the purpose of the analysis.
Absolute changes in current assets indicators are calculated using the following formula:
The growth rate and increase in indicators of current assets are calculated using the following formula:
Identification of the main patterns and trends in changes in the property status of the enterprise, the factors that determined them and the forecast of the prospects for its strengthening.
In the course of analyzing and diagnosing the property status of an enterprise, the following interpretations of the ratio and changes in indicators are possible:
1. An increase or decrease in the enterprise’s property (non-current and current assets) indicates an increase or decrease in the production potential of the enterprise and its activities.
2. Violations of the proportional share of non-current and current assets, as well as own and borrowed sources of their formation in the absolute change of property can lead to structural changes in its composition, which in turn is a consequence of imbalances in the implementation of different types of activities and, as a result, changes the state financial stability of the enterprise.
3. The growth of accounts payable must be accompanied by a corresponding increase in accounts receivable and cash.
Vertical analysis of current assets is the determination of the structure of current assets, that is, the allocation of the specific weight of individual items of current assets in the final indicator, the balance sheet currency, and the determination of structural changes. The structure of working capital reflects the specifics of the operating cycle.
The share of the current assets indicator is calculated using the following formula:
The change in the share of an individual item is calculated as follows:
When analyzing the structure of current assets, it should be borne in mind that the stability of the financial condition largely depends on the optimal allocation of funds at the stages of the circulation process: supply, production and sales of products. The amount of capital investment in each stage of the circulation depends on the industry and technological characteristics of the enterprises. Thus, for enterprises with material-intensive production, a significant investment of capital is required in inventories, for enterprises with a long production cycle - in work in progress, etc.
Vertical analysis is based on four analytical procedures:
Aggregation of balance sheet indicators into an analytical balance sheet and calculation of absolute values of aggregated items in the same way as in horizontal analysis.
Calculation of indicators of the structure of current assets in the context of types of funds and sources of their formation.
Calculation of deviations in the structure of current assets for compared periods.
Identification of the main trends and patterns in changes in current assets, the factors that determined them and forecast the prospects for its strengthening.
An increase in the share of current assets in the composition of property causes an acceleration of the turnover of the enterprise’s assets and vice versa; An increase in inventories and costs in the composition of current assets leads to a slowdown in the turnover of current assets, and an increase in the share of cash and short-term financial investments leads to its acceleration. An increase in the share of receivables with a decrease in the share of material working capital indicates the actual immobilization of material working capital from the production process and a drop in its volume.
An increase in the share of fixed assets with a simultaneous increase in the share of inventories and work in progress indicates an increase in the production base of the enterprise and, at the same time, with a significant increase in the latter (NP), an irrational economic strategy, as a result of which a significant part of the working capital is concentrated in the least liquid form.
An increase in the share of financial investments determines the tendency towards the development of financial activities along with production (with minor fluctuations in the share of cash and inventories) or due to the curtailment of production (with their reduction).
Vertical analysis of material current assets allows us to characterize the type of activity of the enterprise. Trading enterprises do not have inventories of materials and work in progress, with a large volume of goods for resale and goods shipped. Organizations providing services, as a rule, do not have inventories and finished products as part of their assets, and current assets are represented by a significant share of accounts receivable and deferred expenses.
An increase in the share of own funds in the composition of sources due to the redistribution of the shares of any other source indicates the strengthening of the financial independence of the enterprise.
An increase in the share of retained earnings can be considered as a source of replenishment of working capital and a reduction in the level of short-term debt as part of the sources of their formation.
The main rule of vertical analysis is the observance of proportion: the ratio of the shares of current assets and non-current assets must be greater than the ratio of the shares of borrowed and equity funds.
2.2. Methodology for analyzing turnover and profitability of an organization's working capital
Ratio analysis is the calculation of relative financial indicators, based on absolute indicators of current assets, and represents a ratio of interrelated units.
Indicators of business activity make it possible to assess the financial position of an enterprise from the point of view of solvency: how quickly funds can be converted into cash, what is the production potential of the enterprise, whether its own capital and labor resources are used effectively, how the enterprise uses its assets to generate income and profit.
General indicators of business activity include, first of all, turnover indicators. The following indicators are used in theory and practice:
1. The turnover ratio of working capital and the duration of their turnover
Sales revenue - Line 010 f.2;
OA avg. – arithmetic average for current assets (beginning and end of the year – line 290);
The turnover ratio of current assets reflects the number of turnovers made by property during the analyzed period. It is a stimulant indicator and therefore should tend to increase.
Comparison of turnover ratios over the years allows us to identify trends in the efficiency of using working capital. If the number of turnovers made by working capital increases or remains stable, then the enterprise operates rhythmically and uses working capital rationally. A decrease in the number of turnovers made in the period under review indicates a drop in the rate of development of the enterprise and its unfavorable financial condition.
An important factor in improving the financial condition of an enterprise is the acceleration of turnover of working capital (reducing the duration of turnover). The duration of the turnover is expressed in days and is calculated as follows:
T – number of days in the analyzed period (360, 270, 180, 90, 30);
As a result of accelerating the turnover of working capital, a conditional release of working capital occurs, that is, saving it. When turnover slows down, there is an additional attraction of working capital to service production, that is, overexpenditure.
The release or additional attraction of working capital due to acceleration (deceleration) of turnover is calculated as follows:
A positive effect is considered to be a conditional release of working capital when ΔОА is a negative value. When ΔОА has a “+” sign, this is a negative effect of changes in the turnover rate of working capital.
2. Inventory turnover ratio
The turnover and duration of turnover of inventory or production inventories characterizes the use of working productive capital. The amount of production resources diverted from the production process depends on the use of the latter. The formation of inventory balances and the efficiency of their use largely depend on the speed of their turnover, which, in turn, is influenced by the regularity, speed of deliveries and the daily need for raw materials, supplies, fuel, etc. Industrial reserves (raw materials, materials) provide the organization with freedom in making purchases. Inventory levels must be high enough to meet demand when necessary.
The main indicators calculated in this block of current asset turnover analysis are:
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Cost of products sold - Line 020 f.2
Inventories = Line 210 f.1 + Line 220 f.1
Zap. Wed = arithmetic average of reserves (beginning and end of the year);
The duration of inventory turnover (production cycle time) is expressed in days and is calculated as follows:
This indicator can also be calculated based on the full cost of products sold instead of sales revenue:
3. Turnover ratios of accounts receivable and cash and short-term financial investments;
The accounts receivable turnover ratio, which characterizes the ratio of sales revenue to the average amount of accounts receivable, shows the expansion or reduction of commercial credit provided by the enterprise.
Receivables turnover period (repayment):
The longer the receivables turnover period, the higher the risk of non-payment.
The debt collection period (Tink.) is calculated based on the expected revenue from sales with deferred payment for the analyzed period:
Calculation of the cash turnover period and short-term financial investments is as follows:
The list of calculated ratios can be expanded, depending on the purposes of the analysis and the components of working capital (for example, the turnover ratio of finished products, etc.).
4. Return on working capital
Return on working capital provides a comprehensive assessment of the efficiency of using the company's working capital. Profitability shows the amount of profit from the sale of products (works, services) per 1 ruble. funds invested in the activities of the enterprise. The return on working capital indicator is calculated using the formula:
R ob.cap. = page 140 (F. No. 2) / average on page 290 (F. No. 1);
The indicator can be presented as the product of two other indicators: return on sales and turnover of current assets:
Return on current assets
Return on funds most fully characterizes the efficiency of financial activities of enterprises, comparing results with costs. Return on working capital is usually studied over a long period (5-10 years); analyze the absolute size and rate of its change, and most importantly, identify forecast growth reserves.
2.3 Factor analysis of working capital turnover indicators
Factor analysis is a gradual transition from the initial factor system to the final factor system (or vice versa), i.e. disclosure of a full set of direct quantitatively measurable factors that influence changes in the performance indicator.
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This factor system is a deterministic model of multiple type, and therefore for its factor analysis we will use the method of chain substitutions. The essence of this method is that to measure the influence of one of the factors, its base value is replaced by the actual value, while the values of all other factors remain unchanged. Subsequent comparison of the performance indicators before and after replacing the analyzed factor makes it possible to calculate its influence on the change in the performance indicator.
The combined influence of two factors on the change in the performance indicator is as follows:
We know that the average value of working capital is the algebraic sum of the average values of material current inventories, accounts receivable, short-term financial investments and cash; and net revenue is the sum of variable costs, selling expenses, administrative expenses and sales results. Therefore, at the next stage of factor analysis of working capital turnover, it is advisable to quantitatively measure the influence of the above factors on the change in the performance indicator, i.e. calculate the impact of changes in the average values of tangible current assets, accounts receivable, short-term financial investments, cash, variable costs, commercial expenses, management expenses, sales results on the overall change in the turnover of the enterprise's working capital. For the above calculations, the equity method is used.
Thus, a change in the duration of turnover of working capital due to:
tangible current assets (O m),
Accounts receivable (RA),
Short-term financial investments (SFI),
Cash (D),
The balance of deviations has the following form:
Change in working capital turnover due to:
Variable costs (cost) (PZ),
Commercial expenses (CR),
Management expenses (UR),
Sales result (RP),
The balance of deviations has the form:
The calculation of the impact of dependence can be expanded, depending on the goals of the analysis and the components of working capital.
ChapterIII. Analysis of working capital of LLC -»
3.1. Analysis of the dynamics and structure of current assets using horizontal and vertical analysis techniques
Horizontal and vertical analysis complement each other, so we use a standard analytical table that characterizes both the composition and structure of the property and the dynamics of its components. To calculate changes in indicators of current assets, we will draw up a table:
Table 4.
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Types of current assets |
Amount thousand rubles |
Specific gravity in % |
Changes |
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At the beginning of the year 2004 |
At the end of the year 2004 |
At the beginning of the year 2004 |
At the end of the year 2004 |
Absolute |
Rate of increase |
Structural |
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Materials |
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Finished products |
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Short-term receivables |
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Buyers and clients |
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Advances issued |
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Other debtors |
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Cash |
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Current accounts |
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Other current assets |
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Total current assets |
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During this reporting period, the share of current assets in the total volume of the enterprise’s property decreased from 96.58% to 87.35% (by 9.23% points), and non-current assets, on the contrary, increased from 3.42% to 12.65% (by 9.23% points), which indicates a slowdown the total turnover of the enterprise's assets in a given reporting period.
1. Inventories. During the reporting period, inventories increased by 3,566 thousand rubles. (90.95% - almost twice), which was mainly due to an increase in the stock of materials by 2183 tr. (68.18%) and finished products in warehouses for 2183 tr (192.35% - more than double). The company is striving to expand its production base and this should help reduce turnover. A large increase in finished goods inventories most likely indicates poor demand for products, which is indirectly confirmed by the absence of long-term receivables and a sharp decrease in short-term ones (by 4009 rubles).
The share of inventories in the structure of current assets during the reporting period increased by 28.71% points, which is not a positive change and indicates that current assets are concentrated in the least liquid form and this leads to a slowdown in their turnover. The following changes occurred in the structure of material inventories during the reporting period.
The share of materials and finished products increased (by 16.70 and 11.90% points, respectively), which is most likely a negative trend: decreased turnover, liquidity, poor organization of marketing and sales of products. But it may be that the company simply purchases raw materials for fear of rising prices and fulfills some large order.
Items such as work in progress and goods shipped are not included in the balance sheet at all, which is generally good (work in progress does not participate in economic turnover), but can mean a suspension of production and poorly organized work with customers, in particular, in providing a commercial loan .
2. Accounts receivable. The current assets of the enterprise include only short-term receivables. During the reporting period, it decreased from 5911 tr. up to 1902 tr. (by 42.60% points). On the one hand, this is a positive trend and indicates the absence of diverted funds as long-term receivables and their return to circulation as short-term receivables, as a result, the liquidity of working capital increases. On the other hand, this may indicate a decrease in demand for products and the volume of their sales.
The following changes occurred in the structure of short-term accounts receivable during the reporting period. Short-term receivables from buyers and customers decreased from 5,348 tr. up to 1796 tr. (37.85% points), advances issued decreased from 344 tr. to 53 tr., the debt of other debtors decreased from 219 tr. up to 53 tr. The main part of receivables is the debt of buyers and customers, which decreased by 3552 tr., which led to an increase in the gap and loss of balance between receivables and payables (which increased by 6244 tr. - from 1423 to 7676 tr.). This phenomenon negatively affects the solvency of the organization and reduces its financial stability.
3. Short-term financial investments. This indicator characterizes the financial activity of the enterprise, which was absent in a given reporting period. From this we can conclude that the organization did not conduct financial activities and did not make investment deposits.
4. Cash. In the analyzed period, the total amount of funds of the organization increased by 319 tr. (from 26 to 345 tr.) - by approximately 2.89% in terms of the total amount of working capital, and the growth rate was 1226.92% - this is more than 12 times. This change is assessed positively, although it does not have a very serious impact on the overall situation (2.89% is a low rate of change in cash in the total volume of working capital). An increase in the share of cash indicates a slight increase in the liquidity of working capital and its turnover. The increase in cash was mainly due to the current account (from 24 to 342 tr.) and a slight increase in cash in the cash register (from 2 to 3 tr.).
During this reporting period, the share of current assets in the total volume of the enterprise’s property increased slightly from 87.35% to 87.75% (by 0.40% points), and non-current assets, on the contrary, decreased from 12.65% to 12.25% (by 0.40% points), which indicates a slight acceleration in the turnover of the enterprise's assets in this reporting period, but, in general, the shares of current and non-current assets remained at the level of the end of the last reporting period (01/01/2004).
1. Material reserves. During the reporting period, inventories decreased by 1005 tr, which was due to a decrease in the stock of finished products in warehouses by 1782 tr. (from 2102 tr. to 320 tr.). This indicates that there is demand for the product, and the company periodically sells it in large quantities, most likely due to the fact that the company works with regular customers and fulfills large orders. Material reserves, on the contrary, increased even more (by 718 thousand rubles) and amounted to 6103 thousand rubles at the end of the reporting period. The company continues to expand its production base and this should negatively affect the turnover of working capital.
In the reserves for this period, an item for deferred expenses appeared (61 thousand rubles at the end of the year). This means that the company incurs expenses that relate to future reporting periods. For example, the costs of developing new equipment and producing new types of products. The share of inventories in the structure of current assets during the reporting period decreased by 6.04% points, which is a positive change and indicates that current assets are beginning to acquire a more liquid form and this leads to an acceleration of their turnover.
The following changes occurred in the structure of material inventories during the reporting period. The share of materials increased (by 9.5% points) and the share of finished products decreased (by 16.11% points, respectively). If an enterprise is increasing its production base every year, it means that this is a conscious production policy and a negative trend cannot be seen here. A significant decrease in finished products in the warehouse (almost complete sales) is 4 times greater than the increase in accounts receivable from customers, this indicates that the company sells only ¼ of its products on credit and they are in demand. Work in progress and goods shipped, as in the previous reporting period, are not included in the balance sheet.
2. Accounts receivable. The current assets of the enterprise, as well as in the previous reporting period, contain only short-term receivables. During the reporting period, it increased from 1905 tr. up to 3593 tr. (by 17.15% points). Most likely, the increase in accounts receivable (by 1,688 tr.) is associated with a decrease in finished goods inventories (by 1,782 tr.). An increase in diverted funds as short-term receivables, as a consequence, reduces the liquidity of working capital, but also indicates an increase in demand for products, which are almost entirely sold under commercial credit.
The following changes occurred in the structure of short-term accounts receivable during the reporting period. Short-term receivables from buyers and customers increased from 1,733 tr. up to 2195 tr. (5.28% points); advances issued decreased from 119 tr. up to 459 tr. (3.33% points); the debt of other debtors also increased from 219 tr. up to 53 tr. (8.55% points).
The bulk of accounts receivable - debt from buyers and customers - did not increase too much during the reporting period. The greatest growth was observed in the debt of other debtors.
The increase in accounts receivable (up to 3,593 thousand rubles) and the decrease in accounts payable (by 5,322 thousand rubles - from 7,679 to 2,357 thousand rubles) significantly reduced the gap between them, which has a positive effect on the solvency of the organization and increases its financial stability.
3. Short-term financial investments. In this reporting period, as in the past, there is no indicator of short-term financial investments. From this we can conclude that the company is engaged only in production activities and does not invest its capital; it can be assumed that the company considers its production more profitable than possible capital investments.
4. Cash. In the analyzed period, the total amount of funds of the organization decreased by 331 tr. (from 345 to 14 tr.). This change is assessed negatively, although it does not have a very serious impact on the overall situation (3% of cash is a low figure in the total volume of working capital). A decrease in the share of cash indicates a slight decrease in the liquidity of working capital and its turnover.
The decrease in cash occurred mainly due to the current account (from 342 to 8 tr), and there was also a slight increase in cash in the cash register (from 3 to 6 tr). It can be assumed that the money was spent on purchasing materials and paying off accounts payable or was used to purchase new equipment and improve production.
Table 6
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No. |
Types of current assets |
Amount of rubles |
Specific gravity, % |
Changes |
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At the beginning of 2006 |
At the end of 2006 |
At the beginning of 2006 |
At the end of 2006 |
Abso- |
Pace Nature |
Struk- tour |
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Materials |
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Finished products |
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Future expenses |
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VAT on purchased assets |
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Short-term receivables |
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Buyers and clients |
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Cash |
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Total current assets |
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During this reporting period, the share of current assets in the total volume of the enterprise’s property increased from 87.75% to 91.53% (by 3.78% points), and non-current assets, on the contrary, decreased from 12.25% to 8.46% (by 3.79% points), which indicates a significant acceleration of the turnover of the enterprise's assets in this reporting period compared to the previous one.
1. Material reserves. During the reporting period, inventories increased by 4107 tr, which was almost entirely due to an increase in the stock of materials by 4186 tr. (from 6103 tr. to 10289 tr.). Throughout all analyzed periods, the company continues to expand its production base and this negatively affects the turnover of working capital, although it is a feature of production activities. The quantity of finished products decreased by almost a quarter – 23.75% (from 320 tr to 244 tr). The company maintains a low level of finished product inventory in the warehouse, as it works mainly on individual orders (the color and texture of the leather is ordered by the buyer).
Expenses for the development of new equipment and the production of new types of products (future expenses) decreased by 3 tr., which is not. positive change. The increase in VAT on purchases by 4 times (from 311 thousand rubles to 1135 thousand rubles) is most likely due to the purchase of materials.
The share of inventories in the structure of current assets during the reporting period increased by 14.09% points (from 62.33% to 76.42%), which is a negative change and indicates that current assets are becoming increasingly illiquid and this may lead to a slowdown in their turnover.
The following changes occurred in the structure of material inventories during the reporting period. The share of materials increased (by 15.57% points) and the share of finished products decreased (by 1.31% points). If an enterprise is increasing its production base every year, it means that this is a conscious production policy and a negative trend cannot be seen here. A slight decrease in finished products in the warehouse is accompanied by a significant reduction in accounts receivable (by 19.65% in the share of current assets), which is a positive trend and indicates the release of diverted funds. Work in progress and goods shipped, as in previous reporting periods, are not included in the balance sheet.
2. Accounts receivable. In the current assets of the enterprise, as in previous periods, there are only short-term receivables. During the reporting period, it decreased from 3593 tr. up to 2064 tr. (by 1.5 million rubles). On the one hand, this is a positive trend and indicates the absence of diverted funds as accounts receivable and their return to circulation, as a result, the liquidity of working capital increases. On the other hand, this may indicate a decrease in demand for products and the volume of their production and sales.
The decrease in accounts receivable (to 2064 tr) and the increase in accounts payable (by 4919 tr - from 2357 to 7276 tr) again increased the gap between them, which negatively affects the solvency of the organization, reducing it and lowering it financial stability.
4. Cash. In the analyzed period, the total amount of funds of the organization increased by 55 tr. (from 14 to 69 tr.). This change is assessed positively, although it does not have a very serious impact on the overall situation (the share of cash is less than 1% - a low indicator in the total volume of working capital). An increase in the share of cash should slightly increase the liquidity of working capital and its turnover. Since the company is not engaged in investment activities (there are no short-term financial investments), this change is assessed positively. During this reporting period, the share of current assets in the total volume of property of the enterprise decreased from 91.53% to 84.15% (by 7.38% points), and non-current assets, on the contrary, increased from 8.46% to 15.85% (by 7.39 points). % points), which indicates a significant slowdown in the turnover of the enterprise’s assets in this reporting period compared to the previous one.
1. Material reserves. During the reporting period, inventories increased by 2,726 tr, which was almost entirely due to an increase in the stock of materials by 2,651 tr. (from 10289 tr. to 12940 tr.). Compared to the previous reporting period, the growth rate of inventories decreased noticeably (from 63.34% to 25.74%), and in both periods the growth rate of inventories was close to the growth rate of materials. Throughout all analyzed periods, the company continues to expand its production base and this negatively affects the turnover of working capital, although it is a feature of production activities (seasonality of purchases and large quantities of raw materials). However, it can be assumed that the increase in inventories is associated with an increase in production turnover.
The quantity of finished products decreased (from 244 tr to 221 tr). The company maintains a low level of finished product inventory in the warehouse, as it works mainly on individual orders.
Deferred expenses increased by 152 tr, which is a positive change, since the company is investing money in the costs of developing new equipment and producing new types of products. The increase in VAT on purchases by more than 2 times (from 1135 thousand rubles to 2541 thousand rubles) is associated with the acquisition of fixed assets and the purchase of materials, which can be characterized as a positive factor, since according to the increase in VAT on purchased values, the VAT deductions on sales, which is beneficial for the enterprise.
The share of inventories in the structure of current assets during the reporting period increased by 1.5% points (from 76.42% to 77.92%), which is less than last year, but still a negative change, and indicates that current assets are becoming increasingly illiquid and this may lead to a slowdown in their turnover.
The following changes occurred in the structure of material inventories during the reporting period. The share of materials increased (by 1.48% points) and the share of finished products decreased (by 0.47% points). Increasing the production base is most likely a conscious policy of the enterprise and therefore a negative trend cannot be seen here.
Work in progress and goods shipped, as in previous reporting periods, are not included in the balance sheet.
2. Accounts receivable. In the current assets of the enterprise, as in previous periods, there are only short-term receivables. During the reporting period, it decreased even more from 2064 tr. up to 1158 tr. (almost 2 times.). Most likely, this is a positive trend and indicates a decrease in diverted funds as accounts receivable and their return to circulation, as a result, the liquidity of working capital increases. The debt of buyers and customers decreased from 1379 tr. up to 820 tr.
The decrease in accounts receivable (to 1158 tr.) and the increase in accounts payable (from 7276 tr. to 10326 tr.) again increased the gap between them, which negatively affects the solvency of the organization and reduces its financial stability.
3. Short-term financial investments. In this reporting period, as in previous ones, there is no indicator of short-term financial investments. From this we can conclude that the company continues to engage only in production activities and does not invest its capital.
4. Cash. In the analyzed period, the total amount of funds of the organization decreased by 50 tr. (from 69 to 19 tr.). This change is assessed negatively, although it does not have a very serious impact on the overall situation (the share of cash is still less than 1% - a low indicator in the total volume of working capital). An increase in the share of cash should slightly increase the liquidity of working capital and its turnover.
During the period from 2004 to 2007, the total amount of reserves increased (from 3921 to 13317 tr), which was a consequence of a constant increase in the stock of materials (from 3202 to 12940 tr) (see Fig. 1), the share of material reserves in current assets increased during this period (from 32.48% to 75.72%). The quantity of finished products during the analyzed period decreased (from 719 to 221 tr), which indicates a drop in production rates. At the beginning of 2003, one can highlight a jump in the growth of finished products (up to 2102 tr), which was reflected in the overall growth of inventories. The amount of material reserves increased approximately 4 times, and their share almost 2.5 times. This suggests that current assets are becoming increasingly illiquid and this entails a slowdown in their turnover.
From 2004 to 2008, the change in the amount of accounts receivable was downward. In the current assets of the enterprise for the entire analyzed period there are only short-term receivables, which is assessed positively and is due to the sales policy of the organization. Over four years, accounts receivable decreased from 5911 (at the beginning of 2004) to 1158 tr. (at the end of 2007), although in general its changes are cyclical. The share of accounts receivable in the total volume of working capital also decreased (from 59.97% to 6.77%). A decrease in accounts receivable may indicate the return of funds into circulation and an increase in the efficiency of their use, a reduction in the period of settlement with customers and an improvement in sales policy, but in this case it means a decrease in production and sales of finished products to customers due to decreased demand in the market and the irrational economic policy of the enterprise itself in relation to working capital.
The total amount of funds of the organization from 2004 to 2007 did not change evenly and remained at a low level. Considering that the LLC “-” organization is not involved in investing, this is assessed negatively and indicates a lack of investment sources of liquid funds. Throughout the entire analyzed period, the share of cash in the total volume of working capital did not rise above 3% in the total volume of working capital. An increase in the share of cash should slightly increase the liquidity of working capital and its turnover.
Structural changes in the shares in the total volume of working capital are expressed by an increase in the share of inventories (from 39.77% to 77.92%) and a decrease in the share of short-term receivables (from 59.97% to 6.77). Most likely, this is due to a decrease in the enterprise’s business activity and production and sales volumes.
At the beginning of 2004, the share of accounts receivable was higher than the share of inventories; the subsequent simultaneous increase in the share of inventories and a decrease in the share of accounts receivable is assessed negatively and indicates a deterioration in sales of finished products and a drop in production, which is confirmed by a proportional decrease in net profit. The company is recommended to reduce inventories of materials and revise its marketing policy for product sales.
3.2. Analysis of turnover indicators
The change in turnover indicators for the analyzed periods can be expressed in the following table:
Table 8.
Analysis of turnover indicators
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K ob.oa (number of revolutions per year) |
Voa (days) |
rAct (thousand rubles) |
To ob. zap. |
Return on working capital (%) |
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The change in the duration of one turnover of inventories, accounts receivable, cash and current assets is graphically as follows:
1. The turnover ratio of working capital and the duration of their turnover
K ob.oa = Sales revenue / OA avg. (1)
Turnover for the analyzed periods continued to decline steadily by 2.196, 0.77 and 1.87 turnover, respectively, which is a negative trend and indicates a drop in the rate of production and sales, a decrease in the efficiency of resource use, the overall profitability of production, as well as an increase in the instability of the financial condition enterprises. Moreover, turnover decreased both due to an increase in current assets and a decrease in revenue.
2) Duration of turnover is a decoding of the turnover rate and shows how many days it takes current assets to go through a full cycle. It is expressed in days and is calculated as follows:
Voa = T / K vol.oa = T * OA avg. / Revenues from sales; (2)
If in 2002 the period of one revolution was a little more than a month, then in 2005 it was almost two months.
3) When turnover slows down, there is an additional attraction of working capital to service production, that is, overexpenditure.
Additional attraction of working capital due to slowdown in turnover is calculated as follows:
rOact = (Boa 1 – Boa 0) * Vyr.r 1 / T 1; (3)
For 2002, the overexpenditure of working capital amounted to 2114.26 thousand rubles, i.e. These funds did not participate in turnover, because of this the efficiency of using working capital and the overall profitability of the enterprise decreased. During 2005, overexpenditure decreased by 2 times to 1096.28 tr, but remained positive, which coincides with a slowdown in the rate of decline in turnover of current assets and indicates a reduced, but still existing, drop in the efficiency of using working capital. In 2007, the additional attraction of current assets increased to 3,497.28 thousand rubles, which indicates a deterioration in the rationality of the enterprise’s economic activities and an even greater decrease in production profitability.
2. Inventory turnover ratio.
4) The speed of inventory turnover (To volume of inventory) is one of the most important factors influencing the overall turnover of working capital. Inventory turnover period (Vzap. c/c) is the average period of time required to transform raw materials into finished products and subsequent sale.
To ob. zap. = Cost of products sold / Zap. Wed (4)
In 2004, inventory turnover decreased by 6.86 turns (from 19.76 to 12.9) - even more than the total turnover of current assets, which indicates a drop in production rates, ineffective use of inventories and irrational economic policies in the field of purchasing materials and selling finished goods. products.
During 2005, the rate of slowdown in inventory turnover decreased noticeably. Turnover slowed down by another 2 turns and amounted to 10.9 turns per year. At the end of 2007, inventory turnover decreased to 7.62 turns. Over the four analyzed periods, inventory turnover continued to slow down, therefore, the company needs to reconsider its marketing and sales policies and prevent the accumulation of large stocks of materials and finished products in warehouses.
5) Suddenly. c/c = T * Zap. Wed / Cost of products sold; (5)
As inventory turnover decreases, the period of one turnover increases accordingly. This is not a positive change and indicates that the company is using resources irrationally. Current assets are concentrated in the least liquid form and this leads to a slowdown in their turnover and loss of profit.
3. Accounts receivable and cash turnover ratios;
6) The repayment period for receivables is the ratio of the duration of the analyzed period to the receivables turnover ratio and is calculated:
Vdz = T * DZ. Wed / Revenues from sales; (6)
During 2004, the repayment period for accounts receivable decreased by almost 2 days, therefore, its turnover increased. This indicates a decrease in commercial credit provided by the enterprise, the return of diverted funds into circulation and, most importantly, the acceleration of the payment process for sold products. In 2005, the turnover period decreased slightly (from 10.4 to 10.32 days), and in 2007 it decreased to 6 days, which is a positive change indicating a decrease in diverted funds as receivables and their return to circulation, as a result, the liquidity of current assets increases funds.
7) The cash turnover period is as follows:
Vds = T * DS. Wed / Revenues from sales; (7)
The cash turnover period for 2002 increased slightly (from 0.5 to 0.68 turnover), which indicates a decrease in the efficiency of their use, a slight decrease in the liquidity of working capital and its turnover, and also indicates the withdrawal of funds from circulation. In 2006 and 2007, the cash turnover period decreased to 0.15 and 0.16, respectively, which can be regarded as a positive change and an increase in the efficiency of using cash, but their share in current assets is too small (below 1%) to be considered significant.
4. Calculation of return on working capital
8) R ob.cap. = Approx. Accounting / OA avg. = page 140 (F. No. 2) / average on page 290 (F. No. 1);
From 2004 to 2007, the profitability of working capital continued to decline steadily (15% to 2%), which is a negative trend and indicates a decrease in the overall efficiency of its functioning, a decrease in the return on the use of working capital, as well as the irrational use of working capital, a decline in production ( a decrease in the total cost is proportional to the drop in sales revenue).
To increase the profitability of working capital, an enterprise needs to use working capital more efficiently, change the amount of turnover and its structure, and use progressive methods of selling products.
3.3. Factor analysis of working capital turnover indicators
Indicators of turnover of working capital can be considered as an effective indicator with the identification of factors of the first and subsequent orders. The duration of the turnover of working capital depends on the average size of working capital and sales revenue. Therefore, the overall change in the turnover rate will consist of two components: the average annual size of current assets (OA avg.) - a first-order factor, and sales revenue (Vr.r.) - a second-order factor.
The change in the duration of turnover of working capital due to a change in the average size of current assets is calculated as follows:
ΔB(OA avg.) = T * ΔOA avg. / Vyr.r.0;
ΔB(OA avg.) = 360 * (10677.5 - 10403.5) / 115436 = 0.85;
In general, from 2004 to 2005, the change in current assets negatively, although not too significantly, affected the turnover of current assets and the period of their turnover, which was mainly caused by an increase in the total mass of current assets and, in particular, an irrational business strategy in terms of the purchase of materials and sales finished products. To increase turnover, the company needs to keep current assets in a more liquid form and prevent growth and large differences in accounts receivable and finished products in the warehouse, that is, revise the marketing policy for the sale of products, if this is possible in principle.
The influence of a second-order factor (revenue from product sales) on the change in the performance indicator is expressed:
ΔB(Vyr.r.) = T * OA av.1 * [ (1 / Vyr.r.1) – (1 / Vyr.r.0) ];
ΔВ(Vyr.r.) = 360 * 10677.5 * [ (1 / 95142) – (1 / 115436)] = 7.1;
The size of average working capital had little effect on the turnover of current assets. Their turnover slowed down due to a decrease in sales revenue, which affected it 8 times more than the value of average working capital, which indicates a decrease in production and sales volumes, as well as irrational and ineffective use of working capital (the more turnover the working capital makes in a year assets, the greater the revenue will be).
Since each of the factor indicators can be presented as the result of additive model indicators, that is, the sum of factor indicators expressing the action of second-order factors. To detail the analysis, the method of equity participation is used. The share of influence of each component of working capital on the turnover time of working capital is calculated.
Deviation balance:
ΔB(OA av.) = ΔBOA(Zap. av.) + ΔBOA(DZ. av.) + ΔBOA(KFV. av.) + ΔBOA(DS. av.) + ΔBOA(VAT. av.) + VOA(Other OA. Wed.);
ΔBOA(Zap. av.) = ΔB(OA av.) * ΔZap. Wed / ΔOA avg.;
ΔBOA(Zap. av.) = 0.85 * (6986.5 - 5704) / 274 = 3.98;
Accounts receivable:
ΔBOA(DZ. av.) = ΔB(OA av.) * ΔDZ. Wed / ΔOA avg.;
ΔBOA(DZ. av.) = 0.85 * (2749 - 3906.5) / 274 = - 3.59;
Money:
ΔBOA(DS. avg.) = ΔB(OA avg.) * ΔDS. Wed / ΔOA avg.;
ΔBOA(DS. avg.) = 0.85 * (179.5 - 185.5) / 274 = - 0.018;
ΔВОА(VAT. av.) = ΔВ(ОА av.) * ΔVAT. Wed / ΔOA avg.;
ΔBOA(VAT. av.) = 0.85 * (755 - 599.5) / 274 = 0.48;
The balance of deviations converges:
ΔB(OA av.) = ΔBOA(Zap. av.) + ΔBOA(DZ. av.) + ΔBOA(KFV. av.) + ΔBOA(DS. av.) + ΔBOA(VAT. av.) = 3.98 + ( - 3.59) + (- 0.018) + 0.48 = 0.85;
The increase in inventories had a negative impact on turnover, which was almost completely compensated by a decrease in accounts receivable (3.98 and -3.59, respectively). This suggests that the enterprise uses resources irrationally (from year to year, increasing inventories). The concentration of working capital in the least liquid form slows down turnover, which causes production volume to fall and sales profits to decrease. The reduction in average accounts receivable had a positive effect on turnover and almost completely offset the negative impact of the increase in inventories. It is impossible to unambiguously assess the change in accounts receivable in one direction or another. Its decrease indicates an increase in the liquidity of working capital, the return of funds to circulation and the repayment of debts. But it can also mean a drop in product sales (if there were no sales of products not on credit) and, accordingly, vice versa.
The change in cash had a positive, although insignificant (-0.018), effect on turnover due to its small share in current assets.
ΔB(Vyr.r.) = ΔВVyr.r.(PZ) + ΔВVyr.r.(KR) + ΔВVyr.r.(UR) + ΔВVyr.r.(RP);
Due to cost (variable costs):
ΔVyr.r.(PZ) = ΔV(Vir.r.) * ΔPZ / ΔVir.r.;
ΔVVal.r.(PZ) = 7.1 * (90121 - 112732) / -20294 = 7.91
Due to business expenses:
ΔВVyr.r.(KR) = ΔВ(Vyr.r.) * ΔKR / ΔVyr.r.;
ΔVVal.r.(KR) = 7.1 * (-12) / -20294 = 0.004;
Due to management expenses:
ΔВVyr.r.(UR) = ΔВ(Vyr.r.) * ΔUR / ΔVyr.r.;
ΔVvyr.r.(UR) = 7.1 * (3645) / -20294 = - 1.27;
Due to sales results:
ΔВVyr.r.(RP) = ΔВ(Vyr.r.) * ΔРП / ΔVyr.r.;
ΔVVal.r.(RP) = 7.1 * (1376 - 2692) / -20294 = 0.46;
The balance of deviations converges:
ΔВ(Vyr.r.) = ΔВVyr.r.(PZ) + ΔВVir.r.(KR) + ΔВVir.r.(UR) + ΔВVyr.r.(RP) = 7.91 + 0.004 + (- 1.27) + 0.46 = 7.1;
A slowdown in turnover (an increase in the period of one turnover) is associated with a reduction in sales revenue. The greatest impact (7.91) was exerted by a decrease in the total cost of manufactured products, that is, a reduction in its production. Selling, administrative expenses and sales results had an insignificant impact on turnover (0.004, -1.27 and 0.46, respectively). As a result of the calculation, it turned out that an increase in management expenses has a positive effect on the change in the period of turnover of working capital, i.e. reduces it. The reduction in commercial expenses and sales results negatively affected the change in the turnover period, which indicates a reduction in production and sales of products.
Conclusion
The condition and efficiency of use of working capital is one of the main conditions for the successful operation of an enterprise. Limited resources, instability of the market economy, inflation, non-payments, and other crisis phenomena force enterprises to change their policy in relation to current assets, look for new sources of replenishment, and study the problem of the efficiency of their use and their optimal size.
The first chapter of this thesis covers the theoretical and organizational aspects of working capital turnover. The concept of working capital, its composition and classification, purpose and role in production are given. Factors that increase the efficiency of use and turnover of working capital are identified. The main goal, objectives and information sources of working capital analysis are determined.
Main points of the first chapter:
1) Working capital constantly circulates in the process of economic activity, changing its form from monetary to commodity and vice versa. Thus, they form the bulk of production costs. On the other hand, they are a guarantor of the enterprise’s liquidity, that is, its ability to pay its obligations.
2) The main components of working capital are: inventories (materials and finished products), accounts receivable, short-term financial investments and cash.
3) The financial position of enterprises is directly dependent on the state of working capital, the efficiency and rationality of their use and involves the comparison of costs with the results of economic activity.
4) By managing working capital, the company is able to depend less on external sources of funds and increase its liquidity.
5) The main goal of working capital analysis is the timely identification and elimination of shortcomings in working capital management and finding reserves for increasing the intensity and efficiency of its use.
6) The main information sources for the analysis of current assets are the balance sheet (form No. 1) and the profit and loss statement (form No. 2), approved by order of the Ministry of Finance of the Russian Federation dated July 22, 2003 No. 67n.
The second chapter reflects the methodological foundations and approaches to the analysis of working capital turnover. Methods for analyzing the level of dynamics and structure of working capital, methods for analyzing the turnover and profitability of an organization's working capital, and methods for factor analysis of working capital turnover indicators are described. Formulas for calculating turnover ratios, calculating the influence of first, second and third order factors, their significance for the analysis of current assets, as well as the main interpretations of the ratio and changes in indicators are given.
The third chapter directly analyzes the working capital of LLC “-”. It includes: horizontal and vertical analysis, analysis of turnover indicators, factor analysis of working capital turnover indicators.
The analysis concluded the following:
From 2004 to 2007, there was an increase in the share of inventories in the total volume of working capital (from 39.77% to 77.92%) and a decrease in the share of short-term receivables (from 59.97% to 6.77%). Which is associated with a decrease in the enterprise’s business activity and production and sales volumes. The amount of material reserves increased approximately 4 times, and their share almost 2.5 times. This suggests that current assets are becoming increasingly illiquid and this entails a slowdown in their turnover. A simultaneous increase in the share of inventories and a decrease in the share of accounts receivable indicates a drop in the production of finished products and a deterioration in their sales. The company is recommended to reduce material inventories to the optimal level and revise the marketing policy for product sales.
In general, during the analyzed period, the turnover of current assets decreased by almost 2 times (from 11 to 6 full turns), which was mainly caused by a decline in production and a decrease in sales revenue, an increase in the total mass of current assets and, in particular, an irrational business strategy in terms of purchasing materials and sales of finished products. A decrease in turnover indicates a decrease in the efficiency of resource use and overall profitability of production, as well as an increase in the instability of the financial condition of the enterprise. Moreover, turnover decreased both due to an increase in current assets, in particular inventories, and due to a decrease in revenue. From 2004 to 2007, additional attraction of current assets increased from 2114.26 to 3497.28 tr, which indicates a deterioration in the rationality of the enterprise’s economic activities and a decrease in production profitability. To increase turnover, the company needs to increase the liquidity of current assets (by reducing the share of materials and increasing cash) and to prevent growth and large differences in accounts receivable and finished products in the warehouse, that is, to revise the marketing policy for product sales.
From 2004 to 2007, the profitability of working capital continued to decline steadily (from 15% to 2%), which is a negative trend and indicates a decrease in the overall efficiency of its functioning, a decrease in the return on the use of working capital, as well as irrational use of working capital, a decline in production (the decrease in the total cost is proportional to the decrease in sales revenue).
The size of working capital had a slight impact on the turnover of current assets (0.85), turnover slowed down due to a decrease in sales revenue (7.1), which affected it 8 times more than the value of average working capital, which indicates a decrease in production volume and sales, as well as irrational and ineffective use of working capital (the more turnover current assets make in a year, the greater the revenue will be). The greatest impact (7.91) was exerted by a decrease in the total cost of manufactured products, that is, a reduction in its production. The increase in inventories had a negative impact on turnover, which was almost completely compensated by a decrease in accounts receivable (3.98 and -3.59, respectively). This suggests that the enterprise uses resources irrationally (from year to year, increasing inventories). The concentration of working capital in the least liquid form slows down turnover, which causes production volume to fall and sales profits to decrease. The reduction in average accounts receivable had a positive effect on turnover and almost completely offset the negative impact of the increase in inventories.
To increase the turnover of working capital, the enterprise needs to use working capital more efficiently and change the amount of turnover and its structure, use progressive methods of selling products, etc. The enterprise is recommended to reduce inventories of materials to the optimal level, increase the liquidity of current assets (by reducing the share of materials and increasing cash) and prevent growth and large differences in accounts receivable and finished products in the warehouse, that is, revise the marketing policy for product sales.
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The financial activity of commercial organizations is based on the analysis of a number of indicators, which include asset turnover, the calculation of which allows us to determine how effectively the organization uses its assets or liabilities.
Asset turnover
COds = V / DS, where
KODS – cash turnover ratio,
B – revenue,
DS - the amount in the accounts and cash register of the enterprise.
If the ratio tends to decrease, this means that the operation of the enterprise is organized inefficiently, and highly liquid assets are used at a slower pace.
Turnover of tangible current assets (inventories)
The correct organization of the production process also requires the effective use of reserves, the calculation of which is carried out in the following order:
KOzap = B / ZAP, where
KOzap – inventory turnover ratio,
B – revenue,
ZAP – book value of inventories.
An increase in the indicator indicates that the demand for products sold is at a good level and the goods are not sitting in warehouses. A decrease in the indicator indicates that the company’s marketing policy is poorly organized and requires careful analysis.
The analysis of these indicators should be carried out not by comparison with established standards, but by considering their dynamics over the past years and making a comparison with the activities of competitors. So, if the indicator does not reach the norm, but at the same time, compared to other reporting periods, it is of greater importance, this indicates the correct organization of the enterprise’s activities and a gradual increase in asset turnover.
Analysis of profitability of organizations
The financial and economic activities of any legal entity, regardless of the form of ownership, are assessed by analyzing the absolute and relative indicators of its activities. The indicators of the first group do not carry an economic burden and are purely arithmetic in nature.
Relative indicators characterize how well the financial and economic activities of an enterprise are organized and show the dynamics of its development. One such indicator is return on assets, which is calculated by multiplying the asset turnover ratio by the return on products sold.
It is the ratio of net profit to revenue, and net profit in turn is the difference between revenue received and cost of goods sold.
Thus, the higher the capital productivity ratio, the greater the organization’s profit in the reporting period.
We analyze the results obtained
Ra = PE / SAsr, where
Ra – return on assets,
PE – net profit,
CAср – average asset value.
The return on current assets is calculated in the same way.
In order to make a complete analysis of the enterprise’s activities, all groups of factors must be taken into account: capital productivity, return on sales, intensity of OS operation, efficiency of financial management. Constant monitoring of the enterprise’s activities will allow us to develop the right development strategy aimed at ensuring financial stability. The completeness of the analysis of business activity also depends on the correctness of the data provided in the reporting documentation.
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Introduction
turnover asset information
Enterprise asset management, i.e. composition and structure of his property, allows one to assess their dynamics and make a decision on the necessary directions for their change. The structure of assets characterizes, first of all, the level of mobility of the enterprise's property, and also allows us to determine through which elements this mobility is ensured, reduced or increased. All this is of great importance for assessing the financial condition of the enterprise and the possibilities for its improvement.
The solvency and financial stability of the enterprise directly depend on the structure of assets. In addition, this structure has a great influence on the system of indicators, which are commonly called business activity coefficients.
Information about the financial condition of an enterprise, contained in its balance sheet, provides a fairly solid basis for determining specific measures for managing the finances of the enterprise.
The amount of own working capital characterizes that part of capital and reserves that serves as a source of covering current assets. Own sources of funds are intended to cover primarily non-current assets. The latter are the least mobile element of property, so having borrowed funds as a source of coverage is risky.
Working capital is one of the components of the enterprise's property. The condition and efficiency of their use is one of the main conditions for its successful activities. The development of market relations determines new conditions for their organization. High inflation, non-payments and other crisis phenomena force enterprises to change their policy in relation to current assets, look for new sources of replenishment, and study the problem of the efficiency of their use.
In the system of measures to improve the efficiency of social production, an important place is occupied by the issues of rational use of working capital in all spheres of human activity, especially in industry.
Working capital turnover is one of the most important indicators characterizing the intensity of use of an enterprise's working capital and its business activity. The financial condition of the organization directly depends on how quickly funds invested in current assets turn into real money. Thus, an increase in non-payments impedes the rhythm of the organization’s activities and leads to an increase in accounts receivable; excessive diversion of funds into inventories, work in progress, and finished products leads to the “death” of resources and inefficient use of working capital.
The purpose of writing the course work is to analyze the turnover of assets of NPO IT JSC and their main elements, to identify reserves for increasing the efficiency of their use.
The objectives of the course work include:
Studying the classification and characteristics of the enterprise's assets;
Study of asset turnover and their indicators;
Direct analysis of the composition and structure of assets of NPO IT JSC and their turnover with conclusions about its results and recommendations for accelerating turnover.
1. Theoretical foundations of asset turnover and their constituent elements
1.1 Essence, classification and characteristics of enterprise assets
To carry out economic activities, each enterprise must have certain property that belongs to it under the rights of ownership or possession. All property owned by an enterprise and reflected in its balance sheet is called its assets.
Assets represent the economic resources of an enterprise in the form of total property values used in economic activities with the aim of making a profit.
The tangible assets of an enterprise have a material form. These are enterprise-owned structures for production and non-production purposes, residential and administrative buildings, land, production equipment and machinery, stocks of materials, raw materials and fuel, and so on.
Financial assets of an enterprise are financial instruments owned by the enterprise: financial investments, receivables, monetary assets in various currencies, cash on hand, securities, insurance policies, and so on.
Intangible assets of an enterprise are the right to use some intellectual property, including a trademark, logo, patents for inventions, and so on.
In accordance with the nature of the participation of assets in the production cycle, current and non-current assets are distinguished.
Current assets are completely consumed during one production cycle, ensuring the company's operating activities.
Non-current assets of an enterprise are involved in several production cycles until their entire value is transferred to manufactured products.
Various sources of asset formation make it possible to distinguish between net and gross assets.
Gross assets are formed from both equity and borrowed capital.
Net assets are formed only from equity capital.
The assets of the enterprise are divided into various groups and according to some other criteria:
By right of ownership:
a) Own assets. These include the assets of an enterprise that are in its permanent possession and are reflected as part of its balance sheet.
b) Leased assets. These include the assets of an enterprise that are in its temporary possession in accordance with concluded rental (leasing) agreements.
By degree of liquidity:
a) Assets in absolutely liquid form. These include assets that do not require sale and are ready-made means of payment.
This type of assets includes: monetary assets in national currency, monetary assets in foreign currency.
b) Highly liquid assets. They characterize a group of assets of an enterprise that can quickly be converted into cash (usually within one month) without significant losses in its current market value in order to ensure timely payments on current financial obligations.
Highly liquid assets of an enterprise include: short-term financial investments, short-term receivables.
c) Average liquid assets. This type includes assets that can be converted into cash without significant loss of their current market value within a period of one to six months. Medium-liquid assets of an enterprise usually include: all forms of receivables, except short-term and bad debts, inventories of finished products intended for sale.
d) Low-liquid assets. These include the assets of an enterprise that can be converted into cash without loss of their current market value only after a significant period of time (from six months or more).
This group of enterprise assets includes: stocks of raw materials and semi-finished products, stocks of low-value and wearable items, assets in the form of work in progress, fixed assets, unfinished capital investments, equipment intended for installation, intangible assets, long-term financial investments.
e) Illiquid assets This group includes those types of enterprise assets that cannot be sold independently (they can only be sold as part of an integral property complex).
Such assets include: bad accounts receivable, deferred expenses, losses of current and previous years (reflected as part of the asset balance sheet of the enterprise).
1.2 The concept of asset turnover and their indicators
Asset turnover is a financial indicator of the intensity of use by an organization of the entire set of available assets. This indicator is used along with other turnover indicators, such as accounts receivable turnover, accounts payable turnover, inventory turnover, to analyze the effectiveness of managing the company's property and liabilities.
Features of asset management are determined by the structural affiliation of business entities. If trade organizations have a high share of goods, and industrial enterprises have a high share of raw materials, then financial corporations have a predominant share of cash and cash equivalents.
Asset turnover ratio
Asset turnover ratio (AOR) is the ratio of revenue from product sales to the entire balance sheet asset total.
Koa = B / A (1)
where, B is revenue; A - average annual amount of assets
A= (ASn + ASk) / 2, (2)
where ASn, ASk are the value of assets at the beginning and end of the period, respectively
This indicator characterizes the efficiency of the company’s use of all available resources, regardless of the sources of their formation, i.e. shows how many times per year (or other reporting period) the full cycle of production and circulation is completed, bringing profit to the company, or how many monetary units of sold products brought each monetary unit of assets.
The asset turnover ratio characterizes the efficiency of resource use; its increase indicates a more efficient use of funds. However, this ratio may be artificially high when switching to the use of leased fixed assets.
The value of the turnover ratio of all assets shows the efficiency of using current assets; an increase in the indicator over time indicates an increase in the efficiency of using current assets throughout the enterprise. The asset turnover ratio is directly proportional to sales volume and inversely proportional to the amount of assets used.
Since current assets are an integral part of assets, their reduction also helps to improve the efficiency of using assets as a whole.
In theory, current assets are the capital invested by a company in its current activities for the period of each operating cycle. There is a certain relationship between current assets and sales volume. Too small a volume of working capital limits sales, while too much indicates an insufficiently efficient use of working capital. How to determine the optimal ratio of working capital and sales volume? This ratio helps to find the working capital turnover ratio (Ko).
The working capital turnover ratio is calculated as the ratio of revenue excluding VAT and excise taxes to the average amount of working capital (Avvr) for the period:
Ko = V / OBsr (3)
where, OBav is the average value of current assets
OBsr = (OBSn + OBSc)/2, (4)
where OBSn, OBSk are the amount of working capital at the beginning and end of the period, respectively.
For each enterprise it is individual and, if it is determined, then it is necessary to maintain its value at the optimal level. Finding it is quite simple - if an enterprise, at a given value of the ratio, constantly resorts to the use of borrowed capital, it means that this working capital turnover rate generates an insufficient amount of cash to cover costs and expand activities. Conversely, if, with a constant sales volume or its increase, the enterprise receives sufficient income, then it is considered that an effective rate of working capital turnover has been achieved.
A better idea of the efficiency of asset use is provided by indicators of the asset turnover period, which is the number of days required to convert them into cash and is the reciprocal of the turnover ratio multiplied by the length of the period. To estimate the duration of one turnover in days, calculate the indicator - the duration of one turnover of working capital using the formula:
To=360 / Ko or To = 365 / Ko (5)
The value shows how many days later the funds invested in current assets or their components again take cash form. A decrease in this indicator over time is a positive factor.
Non-current assets are less manageable in terms of accelerating turnover, because are intended for operation for several years, and the service life is regulated by the accounting policy of the enterprise.
The analysis of turnover of current assets is supplemented by the calculation of an indicator called the working capital consolidation coefficient, which shows how many rubles of working capital are accounted for per ruble of products sold (sold).
Kz = Aob / V (6)
where, Aob is the average amount of current assets for the analyzed period (year).
The values for the components of current assets are calculated similarly.
Analysis of settlements with debtors
To assess the quality of settlements with debtors, the receivables turnover ratio is used, the value of which characterizes the speed of return of funds for goods sold on credit; an increase in this indicator over time indicates an improvement in work with debtors and the effectiveness of the pricing policy.
The turnover ratio and turnover duration are calculated using the formulas:
Ko(DZ) = V / DZsr (7)
where, DZsr is the average amount of receivables for the period
The value associated with accounts receivable turnover is the average credit period To(DZ) of buyers (in days), showing how long on average a deferment in payment is provided to buyers.
To(DZ) = 360 / Ko(DZsr) or To(DZ) = DZsr / V * 360 (8)
Knowing daily revenue and average accounts receivable balances, it is easy to determine the average customer credit period, which can be useful when negotiating and concluding a contract. The average values of customer lending must be compared with similar values of accounts payable, in particular the accounts payable turnover ratio Ko(KZ), and the average credit period for suppliers To(KZ), which are calculated as follows:
Ko(KZ) = S / 0.5 (KZ0 + KZ1) (9)
where, S - cost of goods sold; 0.5 (KZ0 + KZ1) - average accounts payable for the period.
To(KZ) = 360 / Ko(KZ) (10)
For rational settlements, the payment deferment provided by suppliers should be longer than the average credit period for buyers. If this does not happen, the company will experience tension in the use of working capital. Credit terms are determined by the forms of settlements with suppliers and buyers and can be accelerated when using advances and letters of credit in settlements with buyers and collections with suppliers.
In the process of analysis, it is necessary to pay attention to identifying the relationships between receivables and payables in terms of turnover and duration of turnover. The rate of turnover of equity capital is also analyzed, which is especially important for shareholders.
Cash turnover analysis
The cash turnover ratio is calculated using the formula:
Co(DS) = V / DS (11)
The value of the indicator shows how many times during the period the funds in the accounts and in the cash register of the organization made turnovers. The duration of cash turnover is calculated using the formula:
To(DS) = 360 / Co(DS) (12)
These indicators are used to evaluate the company's business activity in the use of funds.
A decrease in turnover and an increase in the average period of cash turnover indicates an irrational organization of the enterprise’s work, which allows for a slowdown in the use of highly liquid assets, the main purpose of which is to service the production and economic turnover of the enterprise.
Analysis of turnover of tangible current assets
To assess the level of inventory utilization, the inventory turnover ratio is used, which shows how efficiently the company uses inventory and shows the rate of inventory turnover. Inventory turnover shows how many times purchases were made during the reporting period. The inventory turnover ratio is calculated based on the balance sheet and income statement using the following formula:
Co(ZAP) = S / 0.5*(E0+E1) (13)
where, S - cost of goods sold; 0.5*(E0+E1) - average inventories for the period, E0 - inventories at the beginning of the period, E1 - inventories at the end of the period.
When calculating this indicator, it is necessary to take into account the methodology for calculating the cost of goods sold, which may be different for different methods of distributing indirect costs. Determining average inventory balances is necessary to balance inventory data, which may fluctuate significantly during the reporting period.
Closely related to this coefficient is the average period of inventory storage (Tskl), measured in days. It can be calculated by dividing the number of days of the reporting period by Ko (ZAP), while the year is often rounded to 360 days, the quarter to 90 days, and the month to 30 days.
Tskl = 360 / Co(ZAP) (14)
If, for example, the inventory turnover is 6, then the average storage period is 60 days - this is how much, on average, inventories are in the enterprise from the moment they are purchased from suppliers until the moment they are sold. High Co(ZAP) indicators should alert the analyst. On the one hand, they indicate a high turnover rate, which leads to an increase in profits, on the other hand, they characterize the company’s risky policy in inventory management and a possible shortage of inventory as sales grow. High inventory turnover and short storage times can characterize rapid sales growth that is not provided with an adequate level of inventory and insufficient management attention to this issue.
When analyzing, it is preferable to evaluate any financial indicator not from the point of view of its compliance with certain standards, but rather in the context of the real state of affairs in the company. At the same time, it is certainly useful to compare the performance of the organization in question with the performance of its competitors and, in general, with the industry average.
1.3 Information base of analysis
Analysis of the financial and economic state of enterprises, identification of patterns and trends in development are based on a study of the indicators of their financial statements.
The main forms of financial statements that are needed for analysis are: Balance Sheet (Appendix 1) Profit and Loss Statement (Appendix 2). Since the listed documents contain almost all the required information, it is advisable to consider these forms in more detail.
The balance sheet is the main document of financial reporting, prepared quarterly. The balance sheet is a table consisting of two purposes: assets and liabilities. Its assets reflect the enterprise's funds, grouped by their types, composition, placement in liabilities according to sources of formation and intended purpose. The assets and liabilities of the balance sheet consist of sections, and each section consists of a number of items.
The totals of assets and liabilities are called balance sheet currency and are equal to each other. This equality is due to the fact that the assets and liabilities of the balance sheet reflect the same funds of the enterprise, grouped according to various criteria: in the asset by type of funds and their placement; in the passive according to the sources of formation and their purpose.
The income statement compares the sum of all the business's income from the sale of goods and services or other items of income and receipts with the sum of all the expenses incurred by the business to maintain its operations for the period since the beginning of the year. The result of this comparison is gross (balance sheet) profit, losses for the period.
2. Analysis of asset turnover at NPO IT JSC
2.1 Brief description of the organization
JSC NPO IT is the leading enterprise for telemetric and sensor equipment, microelectronics for rocket and space technology.
"NPO IT" is one of the leading instrument enterprises of the RKS corporation (ROSCOSMOS, ORKK). The creation of new measuring instruments, information-measuring technologies and systems is carried out on the basis of research and development work within the framework of the State Defense Order, FKP and Federal Target Program of Roscosmos.
NPO IT develops and produces on-board and ground-based systems for information and telemetry support for rocket technology, antenna systems, systems for collecting and processing measurement information, measurement systems for launch vehicles and test benches.
The company specializes in the production of radiation-resistant equipment based on domestic electronic components, develops mobile measuring points, creates strap-down inertial navigation systems, and also produces the most modern sensor-transforming equipment for measuring vibration, shock, beating, and temperature. Many developments are used in Gazprom, Transneft, and in various high-tech industries, including energy and transport.
In 2010, a pilot plant “Impulse” was created as part of NPO IT, which expanded the production capabilities of the enterprise. It included assembly shops for ground, on-board and sensor equipment, microelectronic production, machining shops, printed circuit boards and electroplating shops. Today, the modern technological base of the enterprise provides a full cycle of product manufacturing - from the manufacture of individual parts, assembly and installation of equipment and instruments to testing of finished products. Production is being equipped with new high-performance equipment, workshops and technological areas are being reconstructed for new tasks.
The Company's activities are concentrated in Russia. The activities of the enterprise may be affected by risks associated with general instability in the country and a drop in industrial production. Also, the activity of the enterprise is influenced by the imperfection of the country’s legislative framework regulating economic relations.
The main risk factors are:
Non-payments from customers;
The possibility of implementing international sanctions in connection with changes in the geopolitical situation in the world;
Imperfection of the country's legislative framework regulating economic relations;
Insufficient efficiency of the judicial system;
Personnel risks.
Today, NPO IT, together with other enterprises of the corporation, is participating in an important national project to create a new Russian cosmodrome, Vostochny. The measuring complex of the cosmodrome is equipped with the latest AS-M antenna systems, as well as mobile measuring points.
2.2 Analysis of the composition and structure of assets
To analyze the composition and structure of assets, all assets of the enterprise from the balance sheet are used (Appendix 1).
As can be seen from Table 2.1 (Appendix 3), the total value of the enterprise’s assets for 2014 is 2,522,413 thousand rubles. In their composition, current assets amounted to 1,320,537. During the reporting period, they increased by 333955. Inventories increased most significantly (by 230,243 thousand rubles, or 86.19%). The amount of cash decreased by 135,713 thousand rubles, or 57.47%. Accounts receivable increased during the reporting period in absolute terms by 235,441 thousand rubles. and amounted to 707,624 thousand rubles in 2014, which is 28.05% of the total balance sheet asset. Thus, despite the increase in absolute values, in 2014 accounts receivable accounted for almost 1/3 of the balance sheet asset.
In the current assets of the organization in 2014, there was a decrease in the amount of cash, i.e. the most liquid assets, with an increase in reserves. This trend can be considered unsatisfactory, since it may indicate a decrease in the liquidity of the enterprise’s balance sheet.
When analyzing assets, we can see an increase in the value of non-current assets in 2014 by 247,750 thousand rubles, or 25.97% of their value in 2013. In 2014, non-current assets accounted for 47.65% of the balance sheet structure. This happened mainly due to an increase in the cost of fixed assets of the enterprise and the results of research and development by 237,694 thousand rubles, or 26.81% and by 9,801 thousand rubles, or 14.77%.
The increase in the cost of fixed assets of an enterprise should be noted as a positively influencing trend, since it is aimed at increasing the production potential of the enterprise.
The increase in current assets turned out to be higher than the increase in non-current assets by 7.04%, which indicates the expansion of the main activities of the enterprise and creates favorable conditions for the financial activities of the enterprise.
2.3 Analysis of asset turnover indicators
The balance sheet and income statement are used to analyze asset turnover ratios.
Values for average assets are taken from line 1700 of the balance sheet
Values for the average value of current assets from line 1200
Values for the average amount of accounts receivable from line 1230 of the balance sheet
Revenue from line 2110 of the income statement
Table 2.2. Asset turnover indicators of NPO IT JSC
|
Index |
Change |
|||
|
Revenue, thousand rubles |
||||
|
Average assets, thousand rubles. (A) |
||||
|
Average value of current assets, thousand rubles. (Obsr) |
||||
|
Asset turnover ratio (AOR) |
||||
|
Asset turnover period, days (To) |
||||
|
Current assets turnover ratio (To) |
||||
|
Period of turnover of current assets, days (To) |
||||
|
Accounts receivable turnover ratio (Co(DZ)) |
||||
|
Accounts receivable turnover period (To(DZ)) |
The asset turnover ratio is calculated using formula 1:
For 2013: Koa= =0.89
For 2014: Koa= =0.60
The average value of assets is calculated using formula 2:
For 2013: A= =1727194
For 2014: A= =2231560.5
The turnover ratio of current assets is calculated using formula 3:
For 2013: Ko = = 1.89
For 2014: Ko= = 1.15
The average value of current assets is calculated using formula 4:
For 2013: Obv= =817026
For 2014: Obv= =1153559.5
The asset turnover period and the turnover period of current assets are calculated using formula 5:
For 2013: To = = 404.49; Then = =190.48
For 2014: To= =600; Then = =313.04
The accounts receivable turnover ratio is calculated using formula 7:
For 2013: Ko(DZ) = =3.69
For 2014: Ko(DZ) ==2.61
The receivables turnover period is calculated using formula 8:
For 2013: To(DZ) = = 97.56
For 2014: To(DZ)= =137.93
As follows from the data in Table 2.2, in the analyzed reporting year there was a significant slowdown in asset turnover. Thus, the asset turnover ratio fell from 0.89 to 0.60, and, accordingly, the asset turnover period increased from 410.11 to 608.33 days.
The decrease in turnover of current assets was also very significant. The turnover ratio of current assets decreased from 1.89 to 1.15, and the duration of the turnover period of current assets increased by 124.07 days (from 193.12 to 317.19). The receivables turnover ratio also decreased by 1.08, respectively, and the receivables turnover period increased by 40.37.
The reason for the decrease in asset turnover was a sharp decrease in revenue against the backdrop of growth in both total and current assets.
The assets are highly heterogeneous in structure, which means that the turnover of assets as a whole does not allow us to objectively assess the intensity of use of each of them. Non-current assets change little and are used for a long time, so their turnover is not paid attention to. In turn, indicators of turnover of current assets are extremely important. It is this group of assets that is directly related to ensuring the current activities of the enterprise.
The financial position of an enterprise is directly dependent on how quickly funds invested in assets are converted into real money.
The duration of funds being in circulation is determined by the cumulative influence of a number of multidirectional factors of an external and internal nature.
The economic situation in the country has a decisive influence on the turnover of an enterprise's assets. The severance of economic ties and inflationary processes lead to the accumulation of reserves, which significantly slows down the process of turnover of funds. Internal factors include the pricing policy of the enterprise, the formation of the asset structure, and the choice of methodology for valuing inventory.
Accounts receivable are used in calculations of solvency, liquidity, and net working capital indicators. Depending on how quickly they turn into cash, the financial position of the enterprise and its solvency are determined.
Since accounts receivable occupy a significant share of current assets, an analysis of its condition is required.
High growth rates of accounts receivable may indicate that this enterprise is actively using the strategy of commodity loans for consumers of its products. By lending to them, the company actually shares part of its income with them. At the same time, when payments to an enterprise are delayed, it is forced to take out loans to support its business activities, increasing its own accounts payable.
The share of accounts receivable in current assets has increased, which is typical for the company at present. The accounts receivable turnover amounted to 2.61 times, or 137.93 days. The higher this indicator, the faster receivables turn into cash.
* monitoring the status of settlements with customers for deferred (overdue) debts;
* expanding the circle of buyers in order to reduce losses from non-payment by one or more large buyers;
* control over the ratio of receivables and payables (if there is a significant excess of receivables, a threat to the financial stability of the enterprise arises);
Conclusion
Financial condition is the most important characteristic of the economic activity of an enterprise. It determines competitiveness, potential in business cooperation, assesses the extent to which the economic interests of the enterprise itself and its partners are guaranteed in financial and production terms. However, the ability to realistically assess the financial condition is not enough for the successful functioning of an enterprise and its achievement of its goal. The competitiveness of an enterprise can only be ensured by proper management of the movement of financial resources and capital at its disposal.
As a result of the work performed, it was established that:
Ways to increase the efficiency of capital use are what need to be influenced so that the enterprise receives maximum profit with minimal costs and additional injections from outside.
All criteria for assessing the effective use of capital are important to obtain a positive final result. By practically influencing the adoption of capital use strategies through management decisions, one can achieve a significant improvement in its use.
The condition and efficiency of use of working capital is one of the main conditions for the successful operation of an enterprise. Limited resources, instability of the market economy, inflation, non-payments, and other crisis phenomena force enterprises to change their policy in relation to current assets, look for new sources of replenishment, and study the problem of the efficiency of their use and their optimal size.
Working capital closely circulates in the process of economic activity, changing, completes circulation in the process of economic activity, changing its form from monetary to commodity and vice versa. The financial position of enterprises is directly dependent on the state of working capital, the efficiency and rationality of their use and involves the comparison of costs with the results of economic activity. By managing working capital, an enterprise has the opportunity to be less dependent on external sources of funds and increase its liquidity. The main goal of working capital analysis is the timely identification and elimination of shortcomings in working capital management and finding reserves for increasing the intensity and efficiency of its use.
In conclusion, the following conclusions can be drawn:
1. For the normal functioning of each enterprise, working capital is necessary, which is money used by the enterprise to acquire working capital and circulation funds.
2. Revolving funds, i.e. Material resources, unlike fixed assets, are used in one production cycle, and their cost is transferred to the product immediately and completely.
3. The main feature of the modern transition period is the lack of working capital among enterprises. Acceleration of the turnover of working capital, which is measured by the turnover ratio and the duration of one turnover in days, is achieved by various measures at the stages of creating inventories, work in progress and at the circulation stage.
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Page 1
Working capital (current assets) are funds invested by the organization in current operations during each cycle. The characteristic features of working capital are:
· complete consumption during one production cycle and complete transfer of value to newly created products;
· being in constant circulation;
· during one turnover, working capital changes its form from monetary to commodity and from commodity to monetary, passing through the stages of purchase, consumption and sale.
The peculiarity of working capital is that, under normal business conditions, working capital is not spent, but is advanced into various types of current expenses of the organization, returning to its original value after the completion of each turnover.
The period of time during which the turnover of funds occurs is the duration of the production and commercial cycle, which consists of the period of time between the payment of money for raw materials and the receipt of money from the sale of finished products.
Calculation and assessment of working capital turnover indicators
The efficiency of using working capital is characterized primarily by its turnover.
Fund turnover -
an indicator characterizing the speed of movement of an enterprise's working capital equal to the time during which these funds carry out a full turnover.
Accelerating capital turnover helps reduce the need for working capital, increase production volumes, and therefore increase profits. As a result, the financial condition of the enterprise improves and solvency strengthens.
A slowdown in turnover requires attracting additional funds to continue the organization’s economic activities at least at the level of the previous period.
The length of time funds remain in circulation is influenced by internal and external factors. External factors include: the scope of the organization’s activities, industry affiliation, the scale of the organization, the economic situation in the country and the associated business conditions of the organization. Internal factors - the organization's pricing policy, asset structure, inventory valuation methodology.
To assess working capital turnover, the following are used:
1. Turnover ratio.
Cob. - turnover ratio (in revolutions);
Вр - revenue from sales of products, works, services;
OS is the average amount of working capital.
The turnover ratio shows the number of turnovers made by working capital over the analyzed period of time and characterizes the volume of products sold per 1 ruble invested in working capital.
1. Duration of one revolution.
Dl - duration of the circulation period of working capital (in days);
T - reporting period (in days).
1. Working capital utilization ratio is an indicator inverse to the turnover ratio. Shows the amount of working capital per 1 ruble. sold products. The lower the load factor, the more efficiently working capital is used.
multiplier 100 - conversion of rubles to kopecks.
The amount of absolute savings (attraction) of working capital can be calculated using the formula:
= (108-91) *39993993/360=1888605,1
The calculated value shows the amount of release (additional attraction) of funds obtained from the acceleration (slowdown) of working capital turnover.
The amount of increase in production volume due to the acceleration of working capital turnover can be determined using the absolute difference method:
= (3,327-3,967) *12022792= - 7694586,8
The amount of profit increase as a result of changes in working capital turnover:
=
*3,327/3,967=855233*0,839=717540,48-855233= - 137692,52
Ppl - planned profit;
Table No. 16
Working capital turnover indicators.
|
Indicators |
Deviation |
Rates of growth, % |
|||
|
1. Volume of products produced, rub. (page 010, form No. 2) | |||||
|
2. Number of days of the analyzed period, days. | |||||
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3. Average working capital, rub. (p. 290, f. No. 1) | |||||
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4. Funds turnover ratio, vol. (page 1/page 3) | |||||
|
5. Duration of one revolution, days (page 3 ´ page 2) / page 1 | |||||
|
6. Working capital load factor, kopecks. (page 3/page 1 ´ 100) |
Carrying out an analysis of current assets is the most important area of analysis of financial statements, since changes in the dynamics and structure of current assets determine the solvency of the enterprise, its production capabilities, and the demand for this enterprise in the market.
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