What indicators characterize the efficiency of using working capital? Calculation of efficiency indicators for the use of working capital at the enterprise. Indicators of efficiency of use of working capital
Indicators of efficiency of use of working capital
The financial position of an enterprise is directly dependent on the state of working capital, therefore enterprises are interested in organizing the most rational movement and use of working capital.
This implies, Firstly, safety of own working capital, inadmissibility of reducing their amount available to the enterprise. A necessary condition for the safety of own working capital is the profitable operation of the enterprise. Secondly, working capital (own and borrowed) must be used for specific purposes and in the amount provided for by the financial plan. Third, Working capital should be used efficiently, i.e. plans must be carried out minimum amount working capital.
The effective use of working capital means their functioning in such a way that a stable state of finances is ensured, financial budget discipline is strictly observed, and the highest results are achieved at the lowest cost.
The level of efficiency in using the total amount of working capital and its individual types is characterized by a system of cost and natural, quantitative and qualitative indicators.
The efficiency of using working capital is characterized, first of all, by the turnover of working capital.
Under turnover of working capital refers to the duration of the complete circulation of funds from the moment of acquisition of working capital (purchase of raw materials, supplies, etc.) to the release and sale of finished products. The circulation of working capital is completed by crediting the proceeds to the company's account. 1
The turnover of working capital is not the same at different enterprises, which depends on their industry, and within the same industry - on the organization of production and sales of products, the placement of working capital and other factors. 2
Working capital turnover is characterized by a number of interrelated indicators: the duration of one turnover in days, the number of turnovers for a certain period (turnover ratio), the amount of working capital employed at the enterprise per unit of production (load factor). 3
Duration of one revolution working capital is calculated using the formula:
D= TxOsr/VWed
Where D– duration of turnover, in days; OSR– working capital balances (average or as of a specific date), in rubles; VWed– volume of marketable products for the reporting period, rub.; T- number of days in the period under review.
A decrease in the duration of one revolution indicates an improvement in the use of working capital.
The number of revolutions over a certain period, or working capital turnover ratio (Cob), calculated by the formula:
Kob =VWed/Osr
The higher the turnover ratio under these conditions, the better the use of working capital.
Load factor of funds in circulation(Kz), the inverse of the turnover ratio is determined by the formula:
Kz = Osr/VWed
In addition to these indicators, the indicator can also be used return on working capital, which is determined by the ratio of profit from sales of the enterprise's products to the balance of working capital. 1
Working capital turnover indicators can be calculated for all working capital involved in turnover and for individual elements.
Changes in the turnover of funds are identified by comparing actual indicators with planned or indicators of the previous period. As a result of comparison of working capital turnover indicators, its acceleration or deceleration is revealed.
When the turnover of working capital accelerates, material resources and sources of their formation are released from circulation; when it slows down, additional funds are drawn into circulation.
The release of working capital due to the acceleration of their turnover can be absolute and relative. Absolute release occurs if the actual balances of working capital are less than the standard or balances of the previous period while maintaining or exceeding the sales volume for the period under review. Relative release working capital occurs in cases where the acceleration of their turnover occurs simultaneously with an increase in the volume of output, and the growth rate of production volume outstrips the growth rate of working capital balances. 1
Factors influencing the efficiency of using working capital
Based on the breadth of influence and degree of controllability, the factors can be conditionally grouped into three groups:
general economic;
organizational;
associated with technical progress.
General economic factors include: location of productive forces; dynamics of social labor productivity, development of economic accounting, etc.
The group of economic and organizational factors includes: changes in the size of enterprises and their specialization: the introduction of new production methods, etc.
Factors associated with technical progress are: changes in technology and equipment used in industries serving the enterprise (transport, communications, utilities); automation of production 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 manufactured products, expanding the range of manufactured products, etc. The reduction of working capital is facilitated by: saving material and financial resources and etc.
Factors that determine the amount of working capital can be objective, i.e., independent of the activities of a given enterprise, and subjective (internal and external). 2
Economic
Social
Production
Market infrastructure factors
Organizational and managerial factors
Fig. 2 Main factors for increasing the efficiency of using working capital
TO external factors may include such as the general economic situation, tax legislation, conditions for obtaining loans and interest rates on them, the possibility of targeted financing, participation in programs financed from the budget. These and other factors determine the framework within which an enterprise can manipulate the internal factors of the rational movement of working capital. Internal ones include, for example, the rational use of working capital and the implementation of the production plan. It should be noted that when the effect of one of the factors decreases, the influence of the other increases (Fig. 2).
Criteria for improving the efficiency of use of fixed assets
Increasing the efficiency of using working capital is ensured by accelerating their turnover at all stages of the circulation.
The main external factors influencing the state and use of working capital include such as the crisis of non-payments, high level taxes, high bank loan rates.
The sales crisis of manufactured products and non-payments lead to a slowdown in the turnover of working capital. Consequently, it is necessary to produce products that can be sold quickly and profitably, stopping or significantly reducing the production of products that are not in current demand. In this case, in addition to accelerating turnover, the growth of accounts receivable in the assets of the enterprise is prevented.
At the current rate of inflation, it is advisable to direct the profit received by the enterprise, first of all, to replenish working capital. 1
Significant reserves for increasing efficiency and using working capital lie directly in the enterprise itself. In the production sector, this applies primarily to inventories. Being one of the components of working capital, they play an important role in ensuring the continuity of the production process. At the same time, industrial stocks represent that part of the means of production that is temporarily not involved in the production process.
Rational organization inventories is an important condition for increasing the efficiency of using working capital. The main ways to reduce inventories come down to their rational use; liquidation of excess stocks of materials; improving standardization; improving the organization of supply, including by establishing clear contractual terms of supply and ensuring their implementation, optimal selection of suppliers, and smooth operation of transport.
Reducing the time spent by working capital in work in progress is achieved by improving the organization of production, improving the equipment and technology used, improving the use of fixed assets, especially their active part, and saving on all items of working capital.
The presence of working capital in the sphere of circulation does not contribute to the creation of a new product. 2 Unnecessarily distracting them into the sphere of circulation is a negative phenomenon. 3 The most important prerequisites for reducing investments in working capital in this area are the rational organization of sales of finished products, the use of progressive forms of payment, timely execution of documentation and acceleration of its movement, compliance with contractual and payment discipline.
Accelerating the turnover of working capital allows you to free up significant amounts and, thus, increase production volume without additional financial resources, and use the released funds in accordance with the needs of the enterprise. This can be achieved in the following ways:
At the stage of creating inventories:
The efficiency of using working capital is characterized by a system of economic indicators. Working capital turnover rate is the most important indicator of the intensity of use of working capital and, in turn, is determined using the following interrelated indicators:
- turnover ratio;
- duration of one revolution in days;
- working capital load factor.
Turnover ratio (K 0b) shows the number of turnovers made by working capital per year (half year, quarter), and is determined by the formula
where P is the cost products sold(sales revenue) for a certain period;
O - average balance of working capital for the same period.
The higher the turnover ratio, the better the use of working capital. If sales proceeds, for example, are taken for a year, then the average balance of working capital is also taken for a year. In this case, the average annual balance of working capital for the year is calculated as the average chronological value of the balances by month.
So, if sales revenue for the year amounted to 200 million rubles, and the average annual balance of working capital was 40 million rubles, then the working capital turnover ratio will be:
This means that during the year, each ruble invested in working capital made 5 revolutions.
From here it is easy to determine duration indicator one revolution in days. The peculiarity of this indicator compared to the turnover ratio is that it does not depend on the duration of the period for which it was calculated. For example, two turnovers of funds in each quarter of the year will correspond to eight turnovers per year, with a constant duration of one turnover in days.
In the practice of financial calculations, when calculating turnover indicators, to simplify them somewhat, it is customary to consider the duration of any month to be 30 days, of any quarter to be 90 days, and of a year to be 360 days. The duration of one revolution in days is determined by the formula
where AG about is the turnover ratio;
T- the duration of the period for which the indicator is determined ( T= thirty; 90; 360 days).
With a turnover ratio of 5, the duration of one revolution will be;
A decrease in the duration of one revolution indicates an improvement in the use of working capital.
Working capital utilization factor (TO 3) - an indicator inverse to the turnover ratio.
Its economic meaning is that it characterizes the amount of working capital balance per 1 ruble. proceeds from sales.
In the considered example 
. This value can be interpreted as follows: per 1 rub. The average revenue from product sales for the period under review was 20 kopecks. value of working capital inventories. The lower the working capital load factor, the more efficiently working capital is used.
The acceleration or deceleration of working capital turnover is identified by comparing actual indicators with planned ones or the previous period.
When the turnover of working capital accelerates, material resources and sources of their formation are released from circulation; when it slows down, additional funds are drawn into circulation.
The release of working capital due to accelerated turnover can be absolute or relative.
Absolute release occurs if the actual balances of working capital are less than the standard or balances of the previous period while maintaining or exceeding the sales volume for the period under review.
Relative release working capital occurs when the acceleration of their turnover occurs simultaneously with an increase in the volume of output, and the growth rate of production and sales volumes outstrips the growth rate of working capital balances.
Working capital, after fixed assets, ranks second in size in the total volume of resources that determine the economy of an enterprise. From the point of view of the requirements for effective management of the enterprise's economy, the volume of working capital must be sufficient to produce products in the range and quality required by the market, and at the same time minimal, not leading to an increase in production costs due to the formation of excess reserves.
Working capital turnover indicators are important for assessing financial condition. In addition, an increase in the turnover rate, other things being equal, increases the attractiveness of enterprises from the point of view of investment activity.
In accordance with the stages of circulation of working capital, three directions for accelerating their turnover can be distinguished.
- 1. At the inventory stage:
- establishment of progressive standards for the consumption of raw materials, materials, fuel, energy;
- systematic condition check warehouse stocks;
- correct accounting and planning of resources;
- replacement of expensive types material resources cheap without compromising quality.
- 2. At the production stage:
- application latest technologies production of culinary products;
- mechanization and automation of production processes;
- improving the quality of products;
- reduction of production losses;
- integrated use of raw materials and use of production waste;
- reducing the duration of the production cycle and increasing its continuity.
- 3. At the stage of the sphere of circulation:
- constant study of market conditions, seasonal characteristics of consumer demand for certain types of culinary products and goods;
- formation of a reasonable and flexible pricing policy aimed at increasing competitiveness;
- activation various forms and advertising methods, especially the new range of culinary products (grill, pizza, fast food, etc.);
- quality improvement service clients (corporate evenings, children's parties, broadcasts of matches, etc.);
- establishing the operating mode of individual enterprises in accordance with the flow of needs;
- the use of modern computer technology and the latest cash registers to record the movement of a wide range of dishes, other types of culinary products and purchased goods, and payments to consumers;
- reduction of receivables and payables.
Test questions and assignments
- 1. Describe the composition of working capital.
- 2. What is the difference between working funds and circulation funds?
- 3. Name the types of inventory.
- 4. What elements of working capital include standardized working capital?
- 5. What is the difference between the turnover ratio and the retention ratio?
- 6. List the indicators characterizing the use of working capital.
- 7. What groups are working capital divided into based on sources of formation and replenishment?
- 8. Name the directions for accelerating the turnover of working capital.
- 9. What is the economic meaning of the individual stages of the circulation of working capital of an enterprise?
- 10. What factors influence the composition and structure of an enterprise’s working capital?
In the system of measures aimed at increasing the efficiency of the enterprise and strengthening its financial condition, the rational use of working capital is of great importance, which becomes even more relevant during periods of global financial and economic crises and overcoming their consequences. The interests of the enterprise require full responsibility for the results of its production economic activity.
The efficiency of using working capital of enterprises is influenced by many factors, often in opposite directions (Fig. 4.3).
Rice. 4.3.
working capital
Based on the breadth of influence and degree of controllability, factors can be conditionally grouped into three groups: general economic, 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; performance dynamics social labor, engaged in the sphere of commodity circulation and in the industries serving it.
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: changes in technology and equipment used in service industries (transport, communications, utilities); process automation.
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; expansion of the store network, 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 enterprises (associations).
Factors that determine the amount of working capital can be objective, i.e., independent of activities of this enterprise(for example, the cost of raw materials), 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 time during which current assets complete a complete circuit is called their turnover period. This indicator characterizes the average speed of movement of working capital in the enterprise.
The higher the turnover rate, i.e. the total time spent by working capital in the sphere of production and circulation, the less the need for them. Accelerating the turnover of an enterprise's working capital leads to their release from circulation, and, on the contrary, a slowdown in turnover leads to an increase in the enterprise's need for working capital.
Any enterprise is interested in reducing the size of its working capital, but this reduction must have reasonable limits, since the criterion is the ability of working capital to ensure the normal operation of the organization.
The length of time funds remain in circulation is influenced by external and internal factors. TO external factors include: scope of activity of the organization; industry affiliation; scale of the organization; the economic situation in the country and the associated business conditions. Internal factors - price policy organizations, asset structure, inventory valuation methodology. Below are the main indicators of the efficiency of using working capital.
Turnover ratio (K about) - characterizes the number of turnovers of working capital for the period under review and determines the volume of products sold per 1 ruble. working capital:
Where RP- volume of product sales, thousand rubles;
OS - average annual balance of working capital, thousand rubles.
The average annual balance of working capital is determined using the chronological average formula, following the example of determining the average annual cost of fixed assets.
Working capital utilization factor (K load)- the coefficient inverse to the turnover ratio shows the amount of working capital spent per 1 ruble. products sold:
Duration of one turnover of working capital(d) - shows how many days a full turnover of working capital takes:
Where D- number of days in the period under review.
The shorter the duration of turnover or the greater the number of turnovers made with the same volume of products sold, the less working capital is required, the more efficiently they are used. In connection with the improvement (deterioration) of the use of working capital, the need for them decreases (increases) and they are released (involved).
A distinction is made between absolute and relative release of working capital.
Absolute release working capital is defined as the arithmetic difference between their actual and planned cost. However, absolute release does not take into account changes in the volume of products sold, so an indicator that takes this factor into account is used - relative release.
Relative release working capital (E rel) calculated by the formula
Where RP^ -- planned cost of product sales, rub;
K about- basic turnover ratio;
OS f act- actual cost of working capital, rub.
The amount of working capital at the disposal of the enterprise must be large enough so that the circulation process is not interrupted. At the same time, the presence of excess working capital negatively affects the results of its financial and economic activities.
Reserves and ways to accelerate the turnover of working capital in a generalized form depend on three factors: production volume, sales and the size of working capital. To speed up turnover, you need to:
- improve production and sales, normalize the allocation 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 handling;
- accelerate turnover Money by improving the collection of revenue, strictly limiting cash balances at the enterprise’s cash desks, on the way, and in the 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. Particular attention is paid to studying the causes of identified deviations in certain species current assets and development of measures to optimize them. An increase in inventory may be the result of shortcomings in the organization of trade, advertising, studying customer demand, etc. marketing activities, the presence of unclaimed and slow-moving industries.
Large balances of cash on hand and in transit arise due to irregular sales development, untimely delivery of proceeds to the bank 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 and 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, provide credit to legal and individuals. In case of overexpenditure of special purpose funds and reserves, the main attention is paid to the development of measures to repay and prevent it.
Questions and tasks for self-control
- 1. Name the elements of the company’s working capital.
- 2. What are working production assets, what is their structure?
- 3. What elements of working capital belong to circulation funds?
- 4. What are the sources of the formation of working capital of the enterprise?
- 5. Why is working capital rationed?
- 6. What does the circulation of working capital of an enterprise look like?
- 7. What role do raw materials play in the production process?
- 8. What indicators are used to evaluate the efficiency of the use of raw materials and material resources?
- 9. Name the main directions for improving the use of raw materials and material resources in the enterprise.
- 10. What activities smooth out the influence of the seasonal factor?
The most important indicators of the efficiency of using working capital are the turnover ratio, the duration of the turnover of working capital and the load factor of working capital.
Working capital turnover ratio V characterizes the number of turnovers of working capital during a certain period.
(4.11)
where B is sales revenue (volume of products sold), rub.;
ObS - average annual cost of working capital, rub.
The average annual balance of working capital is calculated using the formula
where ObS 1 is the amount of working capital at the beginning of the period, rub.
ObS n – the amount of working capital on the nth date, r.
n – number of dates under consideration.
The inverse indicator of the turnover ratio is the working capital consolidation ratio.
Consolidation factor (K fixed) shows the amount of working capital per ruble of products sold.
(4.13)
Duration of turnover – the period of time during which working capital makes one complete circuit.
The turnover time is calculated using the formula:
(4.14)
where F is the duration of the calendar period, days;
K rev – turnover ratio for period F.
The duration of the calendar period is taken in round numbers - 360 days per year, 90 per quarter, 30 per month.
When the duration of the turnover decreases, working capital is released from circulation, and vice versa - an increase in the duration of the turnover causes the need for additional funds.
Absolute release calculated by the formula
where ObS pl – planned value of working capital, rub.;
ObS b – basic amount of working capital, rub.
Accelerating the turnover of working capital always leads to a relative release of working capital.
The relative release of working capital is calculated using the formulas:
where I v is the index of growth in the volume of products sold in the plan year compared to the base year;
D b, D pl – respectively, the duration of turnover in the base and plan years;
In pl - the volume of products sold in the planning year.
Solving typical problems
Example 4.1
The power of the tractor produced last year was 110 hp. s., and its weight is 3.56 tons. this year production of tractors with a power of 150 hp began. pp., weight increased by 10% compared to the base model. Determine the relative metal consumption of the old and new tractor models.
Solution:
The main operational characteristic of a tractor is horsepower. In accordance with this, we determine the relative metal consumption using formula (4.3) and for the old tractor model it will be:
O m = 3.56 t / 110 hp. = 0.032 t/hp
The weight of the tractor after the increase will be:
3.56 + 3.56×10%/100% = 3.56×1.1 = 3.916 t
Then, the relative metal consumption of the new tractor model will be:
O m = 3.916 t / 150 hp = 0.026 t/hp
Thus, the relative metal intensity decreased.
Example 4.2
The net weight of the machine is 350 kg, the amount of actual waste when processing the workpiece is 92 kg. As a result of improving the technology for manufacturing machine parts, waste is planned to be reduced by 10%. Determine the metal utilization rate and the share of waste before and after technology changes.
Solution:
We determine the metal utilization coefficient using formula (4.4)
According to the conditions of this problem, we will perform the calculation per machine unit, then:
To i.m. = 350 / (350+92) = 0.7919
Thus, 79.19% of metal is used
The amount of waste before the improvement of technology is 92 kg, then the production of the machine takes 350 + 92 kg = 442 kg of metal.
=
20,81%
After improving the technology, waste will decrease by 10% and amount to:
92 – 92 ×10% / 100% = 92 × (1 – 0.1) = 92 × 0.9 = 82.8 kg
After improving the technology, the production of the machine will require 350 + 82.8 kg = 432.8 kg of metal.
Then the waste level will be:
=
19,13%
Thus, waste levels have decreased.
Example 4.3
The following data is available for the machine-building plant. Volume of gross output in wholesale prices RUB 234,000 million Material costs for the production of gross output are 140,000 million rubles.
Determine material consumption and material productivity.
Solution:
Substituting the initial data into formulas (4.1) and (4.2), we obtain:
M department = 234000/140000 = 1.671 rub.
M e = 140000/234000 = 0.598 rub. per 1 ruble of products
Thus, per ruble of products sold there are 0.598 rubles of material costs.
Example 4.4.
The company produces 120 units of products per year. The cost of producing one product is 100 thousand rubles. per piece, 40% of which are the costs of basic materials. Determine the working capital standard for basic materials. The transit time for materials is 2 days, the time for receiving, storing and preparing materials for production is 1 day. The interval between deliveries is 10 days. The safety stock is 25% of the current stock.
Solution:
The working capital standard in production inventories for the i-th material is determined by formula (4.5).
The annual demand for material is = 0.4 × 100 × 120 = 4800 thousand rubles.
The average daily requirement for material is determined by dividing the cost estimate for the production period by the corresponding number of calendar days in the planning period.
The average daily requirement will be
q i = 4800 thousand rubles/360 days = 13.33 thousand rubles/day
The stock norm in days consists of:
Time spent by materials in transit after payment (transport backlog);
Time for acceptance, unloading, sorting, warehousing and preparation for production (preparatory stock);
Time spent in the warehouse in the form of current stock (current stock); The holding time of a material in the form of a current stock is defined as half the weighted average interval between deliveries of the material.
Time spent in the warehouse in the form of a guarantee stock (safety stock). The safety stock depends on random factors, so its size is difficult to calculate. The time spent by the material in the safety stock is set within the limits of up to 50% of the current stock norm.
Thus, the stock rate in days is equal to:
N m = 2 + 1 + 10/2 + 0.25×10/2 = 9.25 days
The working capital standard for raw materials will be
Q m = 13.33×9.25 = 123.30 thousand rubles.
Thus, the minimum required amount of working capital for the formation of inventories is 123.30 thousand. R.
Example 4.5.
Product output will amount to 8 million rubles. The average annual cost of fixed production assets is 3 million rubles. The specific rate of tool consumption is 20 thousand rubles. and technological equipment 12 thousand rubles. for 1 million rubles product release. The rate of consumption of materials for repair and maintenance needs is 25 thousand per 1 million rubles. the cost of fixed production assets. The tool stock norm is 90 days. Equipment stock norm is 60 days. The standard stock of materials for repair and maintenance needs is 90 days. Determine the need of a large joint stock company for working capital to create the necessary reserves of tools, equipment and materials for repair and maintenance needs.
Solution:
Instrument standard ==40 thousand rubles.
Standard for equipment = = 16 thousand rubles.
Standard for spare parts = = 18.75 thousand rubles.
Total total need = 40 + 16 + 18.75 = 66.5 thousand rubles.
Thus, the need of a large joint stock company for working capital to create the necessary reserves of tools, equipment and materials for repair and maintenance needs is 66.5 thousand rubles.
Example 4.6.
The company produces 120 units of products per year at a price of 120 thousand rubles. a piece. The cost of producing one product is 100 thousand rubles. per piece, 40% of which is the cost of raw materials. The duration of the production cycle is 15 days. Determine the working capital standard for work in progress.
Solution:
The standard for working capital in work in progress is determined by formula (4.6).
With uniform write-off of costs, the cost increase coefficient is determined by formula (4.7).
Since basic materials transfer their cost to the cost of finished products at the beginning of the production cycle, they are therefore included in the cost in full. That's why
From lane = 100×40% / 100% = 40 thousand rubles.
Then we determine subsequent costs by subtracting the initial costs from the total costs of producing a unit of output.
From last = 100 – 40 = 60 thousand rubles.
Substituting the obtained data into the formula for the cost increase coefficient, we obtain:
=
0,7
Average daily costs are
From day = 120 × 100 thousand rubles/360 days = 33.33 thousand rubles/day
Q salary = 15×0.7×33.33 = 349.97 thousand rubles.
Thus, the minimum required amount of working capital for the formation of work in progress is 349.97 thousand rubles.
Example 4.7.
The balance of deferred expenses at the beginning of the planned year is 473 thousand rubles. In the planned year, new expenses are provided that are charged to future expenses in the amount of 210 thousand rubles. 410 thousand rubles will be written off from the deferred expenses account to the cost of production.
Solution:
The working capital standard for future expenses is determined by formula (4.8)
The working capital ratio will be:
Q rbp = 473 + 210 – 410 = 273 thousand rubles.
Thus, the minimum required amount of working capital for the formation of future expenses is 273 thousand rubles.
Example 4.8.
Determine the standard of working capital in finished product inventories for the enterprise considered in the previous examples. The annual production amounted to 120 products at a production cost of 100 thousand rubles. The accumulation time of products to the size of the shipped batch is 5 days. The time required for packaging and labeling of products is 1 day, the time required to transport products to the destination station is 2 days.
Solution:
The standard for finished product inventories depends on the following factors:
the order of shipment and the time required for acceptance of finished products from the workshops;
the time required for completing, selecting products to the size of the shipment and assortment, respectively, according to orders, orders, contracts;
time of accumulation of products to the size of the shipped batch, full use of the container, wagon, platform;
the time required to deliver packaged products from the enterprise’s warehouse to the railway station, pier, etc.;
product loading time;
waiting time for serving Vehicle for loading and approval of documents; storage time in the warehouse of products.
N gp = 5 + 1 + 2 = 8 days.
Per day = 120 pcs. ×100 thousand rubles/360 days = 33.33 thousand rubles.
Q gp = 33.33 thousand rubles. ×8 days = 266.64 thousand rubles.
Thus, the minimum required amount of working capital for the formation of finished products is 266.64 thousand rubles.
Example 4.9.
The price of the product without VAT is 600 rubles, the VAT rate is 18%. Sales volume 5,000 pcs. per quarter, of which 50% is sold on credit for an average period of 30 days, the time for processing documents in settlements is 2 days.
Solution:
The amount of accounts receivable is determined if the terms of payment by buyers of finished products are known. Accounts receivable are calculated based on the calculation of the cost of products sold on credit and the repayment terms of loans using formula (4.9).
Revenue from sales of all products including VAT is equal to
600 × (1+0.18) × 5,000 = 3,540 thousand rubles.
Provided that only half of the products are sold on a deferred payment basis, the working capital requirement for accounts receivable will be:
Q dz = 3,540 × 0.5 × (30 +2) / 90 = 629.33 thousand rubles.
Thus, the minimum required amount of working capital for the formation of accounts receivable is 629.33 thousand rubles.
Example 4.10.
In the reporting year, the company sold 600 pieces of products at a price of 1 million rubles. with an amount of working capital of 70 million rubles. It is planned to increase sales volume by 20%, and reduce the average duration of one turnover of working capital by 10 days. Determine: the working capital turnover ratio, the average time of one turnover in the reporting and planning period, the absolute and relative change in the enterprise's need for working capital.
Solution:
Turnover ratio (turnover rate) shows the number of revolutions made by working capital during the period under review:
To volume report = 600 pcs. ×1 million rub./70 million rub. = 8.57 revolutions.
With an increase of 20%, the planned sales volume will be:
In pl =600 ´ 0.2 +600 = 720 million rubles.
Turnover time or turnaround time in days - shows how many days it takes working capital to make one full revolution.
The average duration of one period in the reporting and planning period will be:
D report = 360 days/8.57 = 42 days.
D pl = 42 days - 10 days = 32 days.
Based on the planned values of the turnover period and the volume of products sold, we determine the planned value of working capital using the formula
, (4.18)
ObS pl = 720´32/360 = 64 million rubles.
We determine the absolute and relative change in the enterprise’s need for working capital using formulas (4.15) – (4.16):
ObSabs = 70 – 64 = +6 million rubles.
ObS rel = 70´1.2 – 64 = +20 million rub.
Thus, as a result of an increase in sales volume, working capital was released.
Assessing the efficiency of using current assets occupies an important place in the analysis of the financial condition of an enterprise, since in relation to its economic activities they perform a servicing function, i.e. in the process of circulation of current assets, profit from sales is generated, which in many ways is the main source of funds ensuring the successful functioning of a commercial organization.
The main sources of information are the balance sheet and profit and loss statement of the organization.
The objectives of studying the state and efficiency of using the organization’s working capital are:
Determining the volume of working capital necessary to ensure the continuity of the organization’s economic activities;
Checking the compliance of inventories of material assets with established standards and identifying excess and unnecessary materials in the production inventories of the organization;
Ensuring the safety of working capital, i.e. identifying and minimizing losses of working capital;
Ensuring the use of working capital for its intended purpose;
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 output, cost, labor productivity, etc.);
Justification of the efficiency of using working capital by accelerating their turnover and conditional release from circulation;
Justification of the optimal need for material resources;
Analysis of current assets begins with studying their volume, composition, structure and dynamics. At the same time, depending on the service provided to the sphere of reproduction, current assets are divided into two groups: current production assets and circulation funds.
At the same time, the faster growth rates of the size and share of work in progress should be considered as negative phenomena (since this is an indirect sign of irregularity production process), as well as the size and share of accounts receivable (since the increasing diversion of current assets from circulation, although temporary, does not contribute to increasing the efficiency of the enterprise’s operating activities).
The most important indicators of the use of working capital in an enterprise are the working capital turnover ratio and the duration of one turnover.
The working capital turnover ratio (Kob) shows how many turnovers the working capital made during the analyzed period (quarter, half-year, year). It is determined by the formula:
where Vр is the volume of product sales for the reporting period;
OSR is the average balance of working capital for the reporting period.
The duration of one turnover in days (D) shows how long it takes for the company to return its working capital in the form of revenue from sales of products. It is determined by the formula:
D=, or D=,
where T is the number of days in the reporting period.
An important indicator effective use working capital is also the utilization rate of funds in circulation. It characterizes the amount of working capital advanced for 1 ruble. revenue from product sales. In other words, it represents the working capital intensity, i.e. costs of working capital (in kopecks) to receive 1 rub. sold products (works, services).
The utilization rate of funds in circulation is determined by the following formula:
where Kz is the load factor of funds in circulation, kopecks;
100 - conversion of rubles to kopecks.
The coefficient of loading of funds in circulation (Кз) is the inverse value of the coefficient of turnover of funds (Kob). The lower the utilization rate of funds, the more efficiently the working capital is used at the enterprise, and its financial position improves.
Due to the fact that working capital consists of working capital and circulating funds, the turnover ratios for them can be determined as follows:
where Kof is the turnover ratio of working capital;
Osr of - working capital for the reporting period;
where KFO is the turnover ratio of circulation funds;
Osrfo - the average balance of circulating funds for the reporting period.
Working capital consists of inventories, work in progress, accounts receivable and deferred expenses. Therefore, for a more detailed analysis, you can determine the turnover ratio for each element of working capital.
This methodological approach is also valid for elements of circulation funds. For example, the turnover ratio of inventories and accounts receivable can be determined from the expression
where Kpz is the inventory turnover ratio;
Osrpz - the average balance of inventories for the reporting period;
where Kdz is the receivables turnover ratio; - average balance of accounts receivable for the reporting period.
Accelerating the turnover of working capital is important, first of all, to improve the financial condition of the enterprise, and ultimately to achieve maximum profit.
Accounts receivable turnover ratio, which characterizes the ratio of sales revenue to average 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 turnover period of cash and short-term financial investments look like this:
The basic rule of analysis is to observe the 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.
The basis for accelerating the turnover of working capital is the volume of production and the speed of its sale. There is a direct and inverse relationship between sales volume and working capital turnover.
Indicators of the efficiency of use of material resources are divided into general and specific.
General indicators include: material intensity of products; material productivity; the share of material costs in the cost of production; coefficient of use of material resources.
Particular indicators of the efficiency of material resources are used to characterize the efficiency of consumption of individual elements of material resources, as well as to assess the material intensity of individual products.
Product material intensity is defined as the ratio of the sum of material costs to the cost of manufactured products and shows the material costs per each ruble of manufactured products:
Ме = Мз/ Nв,
where Mz - material costs; Nв - volume of production in value or physical terms.
Material productivity is an indicator inverse to material intensity and characterizes product output per 1 ruble. consumed material resources: working capital financial asset
Mo = Nv / Mz,
The share of material costs in the cost of production is an indicator characterizing the ratio of material costs to the total cost:
DMZ = MZ / S,
where C is the total cost of production.
The coefficient of use of material resources is the ratio of the amount of actual material costs to the amount of material costs calculated according to planned calculations and actual output and product range. This is an indicator of compliance with material consumption standards:
Ki = Mf.z / Mp.z,
where Mf.z - actual material costs; MP.z - planned material costs.
If the utilization factor is greater than 1, this means overuse of materials; a Ki value less than 1 indicates savings in material resources.
