Odds business activity allow you to analyze how intensively the company uses its funds. As a rule, this group includes various turnover indicators (capital productivity). Turnover indicators (capital productivity) are of great importance for assessing the financial position of the company, since the rate of turnover of funds, i.e. the speed of their transformation into a monetary form, has a direct impact on the solvency of the enterprise. In addition, an increase in the rate of turnover of funds, other things being equal, reflects an increase in the production and technical potential of the company.
Turnover is usually calculated using the following formula:
where FO SR - the turnover ratio of funds.
The average cost of a type of funds for the period is equal to the sum of the cost of funds at the beginning and end of the period, divided by 2.
In formula (3.8), the turnover of funds (FO SR) is expressed in turnover. In order to express the turnover of funds in days, for this you need to know the number of days in the billing period. Then the turnover period in days (P SR) is determined by the formula:
where T is the number of days in the billing period.
Usually, for comparability of the results, the FD SR is calculated for annual period. In this case, the value of T is taken equal to 365 days. When calculating the FD SR for a month, quarter, half a year, in order to bring the value of the FD SR to the period of a year, it is necessary, respectively, to multiply the revenue by 12, 4 or 2.
The most commonly used turnover ratios are:
1) asset turnover ratio;
2) the turnover ratio of fixed assets;
3) turnover ratio current assets;
4) the turnover ratio of receivables;
5) the turnover ratio of accounts payable;
6) inventory turnover ratio;
7) the duration of the turnover of net production working capital;
8) capital turnover ratio;
9) duration of capital turnover;
10) equity turnover ratio.
Asset turnover ratio (transformation ratio (CT) or resource return is determined by the formula:
FO A \u003d KT \u003d Vyr / A. (3.10),
Here A is the average annual value of total assets, which is equal to:
A \u003d OF + OBF,
where OF, OBF - respectively, the average annual cost of fixed (non-current) assets and current (current) assets (OBF).
This indicator (FO A) can be interpreted in two ways. On the one hand, the turnover of assets reflects how many times during the period the capital invested in the assets of the enterprise is turned around (a full cycle of production and circulation is completed), i.e. evaluates the intensity of use of all assets, regardless of the sources of their formation. On the other hand, resource efficiency shows how many rubles of revenue an enterprise has from a ruble invested in assets. The growth of this indicator indicates an increase in the efficiency of their use.
A decrease in FD A indicates the presence of problems in management. If the turnover of assets decreases, then in the process of analysis it is necessary to study the indicators of capital turnover in more detail and establish at what stages of the circulation there was a slowdown (or acceleration) in the movement of funds. To do this, you should determine the turnover separately for each type of asset. It should be borne in mind that the turnover of assets also depends on the organic composition of capital: the larger the share of fixed capital, which turns over slowly, the lower the turnover ratio and the longer the duration of the turnover of the total capital.
When comparing indicators for different companies or for one company, but for different years, it is necessary to check whether uniformity is ensured in the assessment of the average annual value of assets (method of depreciation, depreciation of equipment).
The duration of the turnover of assets may vary due to the amount of proceeds (Vyr) and average balances of assets (A). To calculate the influence of these factors, the chain substitution method is used:
amount of revenue (turnover)
average assets
The duration of capital in certain types of assets can be determined by multiplying the total duration of asset turnover by the share certain types assets in the total average annual amount of assets.
Turnover ratio of fixed assets (or capital productivity of fixed assets) is determined by the formula:
FO OF = Vyr / OF, (3.16),
where FO OF – the turnover ratio of fixed (non-current) assets.
Increasing the return on assets, in addition to increasing the volume of products sold, can be achieved through a relatively low specific gravity fixed assets, and due to their higher technical level. The higher the return on assets, the lower the costs of the reporting period. A low rate of return on assets indicates either an insufficient volume of sales, or an overly high level of investment in these types of assets. In order to increase turnover, enterprises are trying to get rid of fixed assets that are not involved in production.
The reciprocal value of capital productivity of fixed assets is called capital intensity (FOE) and is defined as follows:
In this case, the savings or additional need for them will be equal to:
where OFE F; FE PL - respectively, the actual and planned capital intensity; Vyr PL - the planned volume of production.
Cost savings or additional need for them caused by an increase in production volumes can be calculated using the formula:
, (3.19)
where OF PL, OF F - planned and actual cost fixed assets, respectively;
Vyr PL, Vyr F - planned and actual volume of production, respectively.
Further analysis of the obtained results can be carried out in two directions:
1) in the event of an increase in capital intensity and an increase in the need for funds, analysts should analyze the reasons for this increase (a decrease in production volumes and a deterioration in equipment utilization, an increase in its cost, for example, as a result of revaluation, etc.) and determine the sources of covering the additional need that has arisen;
2) with a decrease in capital intensity and a decrease in the need for fixed assets, it is necessary to look at whether excess or underutilized equipment will appear in this case. Both will lead to an increase in the cost of production in terms of fixed costs and hence lower profits.
An indicator of the efficiency of the use of fixed assets is the capital-labor ratio (F P), which is calculated by the formula:
where N P is the number of personnel.
Subsequent factor analysis allows you to study the influence of each of the factors on the acceleration of the turnover of fixed assets.
Using the expansion method, the numerator and denominator can be multiplied by the number of personnel (N P), which makes it possible to establish a direct dependence of capital productivity on labor productivity (P T) and an inverse dependence on the capital-labor ratio of workers (F P):
. (3.21)
From this it is clear that any purchased equipment should provide a much greater increase in labor productivity compared to the price dynamics for
equipment. The higher the cost of the equipment, the more performance is required from the equipment.
The influence of factors on the increase in production can be calculated using the method of chain substitutions:
the impact of changes in fixed assets (FC) on revenue
where - change in revenue due to changes in fixed assets; - return on assets of fixed assets in the base period; ∆OF - change in fixed assets for the reporting period;
the impact of changes in capital productivity of fixed assets (FO OF) on revenue
where - change in revenue due to changes in capital productivity of fixed assets; OF 1 - fixed assets for the reporting period; - change in capital productivity of fixed assets for the period under review;
The total impact of factors on revenue
Current assets turnover ratio is determined by the formula:
FO OBF \u003d Vyr / OBF, (3.25)
where FO OBF is the turnover ratio of working capital.
Accounts receivable turnover ratio is determined by the formula:
FO DZ \u003d Vyr / DZ, (3.26)
where FO DZ - the turnover ratio of receivables; DZ - average annual real receivables.
According to the FD coefficient of the DZ, it is judged how many times, on average, DZ turned into cash during the reporting period. It is advisable to compare the value of FD DZ with the values of average industry indicators, competitors' indicators, as well as with the values of accounts payable turnover indicators. This approach allows you to compare the terms of commercial lending, which the company uses from other companies, with the terms of lending, which the company provides to other enterprises.
The quality of the DZ is assessed by the specific weight of the promissory note in it, since the promissory note is a highly liquid asset that can be sold to a third party before its maturity.
Accounts payable turnover ratio is determined by the formula:
FO KZ \u003d Seb / KZ, (3.27),
where FO KZ is the turnover of accounts payable; Seb - the cost of goods sold (purchases of the enterprise during the analyzed period; KZ - the average annual cost of accounts payable.
Cost of sales is determined from accounting systems and includes direct material costs, direct labor costs, manufacturing overheads and general business expenses.
If we express FD KZ in days, then the duration of accounts payable will determine the average time that accounts payable remain unpaid.
Due to the difficulties in obtaining initial information, the following formula is most often used for calculation:
FO KZ \u003d KZ * 360 / Vyr. (3.28).
In this case the duration of the turnover of accounts payable shows the period during which the company is able to pay off its accounts payable if the company's revenue remains at the level of the reporting period and it does not create new debt.
The indicator of the duration of the turnover of accounts payable can be considered as an indicator of the solvency of the enterprise in short term. Decree of the President of the Russian Federation of December 20, 1994 No. 2204 and federal law a three-month deadline was set for the fulfillment of monetary obligations for settlements for the supplied products.
If we calculate receivables and payables in days, we determine how many days on average it takes to pay receivables or payables, respectively.
Inventory turnover ratio is determined by the formula:
FO ZAP \u003d Vyr / Z, (3.29)
where FO ZAP - inventory turnover ratio; Z - the average annual cost of stocks.
In general, the higher the FA ZAP, the less funds are tied up in this least liquid item of working capital, the more liquid the structure of working capital is and the more stable financial position enterprises. A slowdown in inventory turnover can occur due to the accumulation of excess, slow-moving, stale materials (this can be easily determined from inventory records or balance sheets), as well as through the acquisition of additional stocks due to the expected increase in inflation and shortages.
The duration of the turnover of net industrial working capital is another turnover indicator .
, or operating current financial needs (OTFP), represents the sum of inventories (W + NP + SOE) and accounts receivable less accounts payable (non-financial).
Net operating capital (PEOK) is determined by the formula:
CHPOK \u003d OTFP \u003d Z + NP + GP + DZ - KZ. (3.30)
The average duration of the turnover of material assets (P NPOK or P FC) characterizes the presence or absence (if the indicator less than zero) the enterprise has its own working capital (in days):
P CHPOK \u003d P FTs \u003d P Z + P NP + P GP + P DZ - P KZ \u003d P PR + P DZ - P KZ \u003d P OP - P KZ, (3.31)
where П ФЦ - the duration of the financial cycle; ПЗ - the duration of the turnover of stocks of raw materials, materials; P GP - the duration of the turnover of finished products; P DZ - the duration of the turnover of receivables; P PR - the duration of the production cycle; P OP - period (duration) operating cycle; P NZ - the duration of the turnover of work in progress.
The positive value of the indicator (P NPOK or P FC) indicates the time during which the working capital of the enterprise is circulating (having gone the whole circle from paying for raw materials and materials, finding them in the form of inventories, work in progress, stocks of finished products until payment for sold products is received ).
Both total and operational current financial needs (TFN) can be calculated in rubles, as a percentage of turnover (sales volume, sales proceeds), as well as in time relative to turnover:
If the result is, say, 50%, then this means that the shortage of working capital of the enterprise is equivalent to half of its annual turnover; 180 days a year, the company works only to cover its TFP. A negative value of the indicator indicates the absence of own working capital, and the value of NPOK (or OTFP) characterizes the minimum amount of a loan to replenish working capital required by the enterprise.
Based on the analysis of the duration of the turnover of net industrial working capital can be made conclusions about the quality of enterprise management. With rational management of the working capital of an enterprise, the duration of the turnover of net production capital is positive, but close to zero. This means that the structure of receivables and payables is balanced, and the amount of reserves is determined by the technological features of production.
An increase in this indicator indicates that significant financial resources are frozen in working capital. Consequently, either the company's purchasing and marketing activities are irrational (stocks are excessive), or work with debtors is inefficient, and the company provides free credit to its counterparties.
A negative, but close to zero value of the duration of the turnover indicates the riskiness of the policy of the enterprise, which builds its activities on the use of free loans from suppliers. Significant negative values indicate that the enterprise does not have its own working capital ( its value characterizes the minimum loan amount for replenishment of working capital) and the presence of problems with financial stability. The reasons for the increase in the duration of the turnover of net industrial working capital can be either unprofitable activities of the enterprise, or the diversion of funds (see Figure 1.14). In both cases, the provision financial resources such an enterprise will not solve its problems. Therefore, it is pointless to issue a loan to such an enterprise.
The business activity of the enterprise is manifested in the rate of turnover of its capital. The acceleration of capital turnover indicates a more intensive use of it and an increase in the business activity of the enterprise. On the contrary, a slowdown in the turnover of funds is a sign of a downturn in business activity. From speed
the turnover of capital depends on its profitability, and as a result - the liquidity, solvency and financial stability of the enterprise.
Therefore, in the process of analysis, it is necessary to study in more detail the indicators of capital turnover, to establish at what stages of the circulation there was a slowdown or acceleration in the movement of funds, to develop measures to eliminate and prevent a liquidity spasm.
Capital turnover rate characterized capital turnover ratios :
turnover ratio (K about);
The duration of one revolution (P o6).
Capital turnover ratio calculated by the formula:
The reciprocal of the capital turnover ratio is called capital intensity (Ke):
Duration of capital turnover calculated by the formula:
where D is the number of calendar days in the analyzed period (year - 360 days, quarter - 90, month - 30 days).
Average balances of the total capital and its components are calculated using the chronological average: 1/2 the amount at the beginning of the period plus the balances at the beginning of each following month, plus 1/2 the balance at the end of the period, and the result is divided by the number of months in the reporting period. The necessary information for calculating turnover ratios is available in the balance sheet and income statement.
When determining the turnover of all capital, the amount of turnover must include the total proceeds from all types of sales. If, however, the turnover indicators are calculated only for operating capital, then only revenue from
product sales. Turnovers and average balances on capital investment accounts, long-term and short-term financial investments are not taken into account in this case.
capital turnover, on the one hand, it depends on the turnover rate of fixed and working capital, and on the other hand, on its organic structure: the larger the share of fixed capital, which turns over slowly, the lower the turnover ratio and the longer the turnover of the total capital involved in the operating process, those.
Equity turnover ratio calculated by the formula:
FO SK \u003d Vyr / SK, (3.36)
where FO SK - equity turnover ratio; SC - the average annual cost of equity.
From a financial point of view, the indicator (FO SK) characterizes the rate of turnover of invested capital, from an economic point of view - activity Money risked by the owner. If it is too high, this entails an increase in credit resources and the possibility of reaching the limit beyond which creditors begin to participate more in the business than owners.
Savings or overspending of funds and capital as a result of turnover is defined as the product of the amount of one-day sales (Exp 1) and the difference in turnover days (P OB) of the reporting (1) and base (planning) (0) periods:
, (3.37)
where ± E - savings (-) due to acceleration or overspending (+) with a slowdown in capital turnover; Vyr 1 - revenue (turnover amount) for the reporting period; T is the duration of the reporting period in days; P OB1 - the duration of the turnover of funds in the reporting period in days; П OB0 - the duration of the turnover of funds in the base period in days.
For example, if we compare the results of the second quarter with the first, we get the following results:
Inventory turnover worsened in the second quarter, which led to the attraction of additional funds in the amount of 227,264.49 thousand rubles, which worsens the financial condition of the enterprise.
To determine the value of the increase in the volume of production due to an increase in the turnover of working capital (ceteris paribus), we use the dependence:
Then it is easy to determine the increase in production by accelerating the turnover of working capital, using the method of chain substitutions:
where is the increase in sales volumes due to an increase in turnover revolving funds(OBF); – increase in the reporting period in the number of turnovers of working capital (OBF); 0 and 1 are the base and reporting periods, respectively.
working capital is a set of funds advanced to create working capital and circulation funds that ensure the continuity of the company.
Composition and classification of working capital
revolving funds are assets that, as a result of its economic activity they completely transfer their value to the finished product, take part in it once, changing or losing their natural-material form.
Revolving production assets enter production in their natural form and are entirely consumed in the production process. They transfer their value to the created product completely.
circulation funds associated with servicing the process of circulation of goods. They do not participate in the formation of value, but are its carriers. After the completion, manufacture of finished products and its sale, the cost of working capital is reimbursed as part of (works, services). This creates the possibility of a systematic resumption of the production process, which is carried out through the continuous circulation of enterprise funds.
Working capital structure- is the ratio between the individual elements of working capital, expressed as a percentage. The difference in the structures of working capital of companies is determined by many factors, in particular, the characteristics of the organization's activities, the conditions for doing business, supply and marketing, the location of suppliers and consumers, the structure of production costs.
Working capital assets include:- (raw materials, basic materials and purchased semi-finished products, auxiliary materials, fuel, containers, spare parts, etc.);
- with a service life of not more than one year or a cost of not more than 100 times (for budget organizations- 50 times) installed minimum size wages per month (low-value consumable items and tools);
- unfinished production and semi-finished products of own production (objects of labor that have entered into manufacturing process: materials, parts, assemblies and products that are in the process of processing or assembly, as well as semi-finished products of their own manufacture, not fully completed by production in some workshops of the enterprise and subject to further processing in other workshops of the same enterprise);
- Future expenses(intangible elements of working capital, including the costs of preparing and developing new products, which are produced in this period, but relate to the products of the future period; for example, the cost of designing and developing technology for new types of products, for rearranging equipment).
circulation funds
circulation funds- funds of the enterprise operating in the sphere of circulation; part of working capital.
The circulation funds include:- enterprise funds invested in stocks of finished products, goods shipped but not paid for;
- funds in settlements;
- cash on hand and in accounts.
The amount of working capital employed in production is determined mainly by the duration of production cycles for the manufacture of products, the level of development of technology, the perfection of technology and the organization of labor. The amount of circulation funds depends mainly on the conditions for the sale of products and the level of organization of the system of supply and marketing of products.
Working capital is a more mobile part.
In every the circulation of working capital goes through three stages: monetary, production and commodity.
To ensure an uninterrupted process, the enterprise forms working capital or material values that await their further production or personal consumption. Inventories are the least liquid item among items of current assets. The following inventory valuation methods are used: for each unit of purchased goods; by average cost, in particular, by weighted average cost, moving average; at the cost of the first time purchases; at the cost of the most recent purchases. The unit of accounting for working capital as inventories is a batch, homogeneous group, reference number.
Depending on the destination, stocks are divided into production and commodity. Depending on the functions of use, stocks can be current, preparatory, insurance or warranty, seasonal and transitional.- Insurance stocks- a reserve of resources intended for the uninterrupted supply of production and consumption in cases of a decrease in supplies compared to those provided.
- Current stocks- stocks of raw materials, materials and resources to meet the current needs of the enterprise.
- Preparatory stocks- stocks dependent on the production cycle are necessary if the raw materials must undergo any processing.
- carryover stocks- part of unused current reserves, which are transferred to the next period.
Working capital is simultaneously at all stages and in all forms of production, which ensures its continuity and uninterrupted operation of the enterprise. Rhythm, coherence and high performance largely depend on optimal size of working capital(circulating production assets and circulation funds). Therefore, the process of normalization of working capital, which relates to the current financial planning at the enterprise, is of great importance. Rationing of working capital is the basis for the rational use of economic assets of the company. It consists in the development of reasonable norms and standards for their consumption, necessary to create a constant minimum stock, and for the smooth operation of the enterprise.
The standard of working capital establishes their minimum settlement amount, constantly required by the enterprise for work. Failure to fill the standard of working capital may lead to a reduction in production, non-fulfillment of the production program due to interruptions in production and sales of products.
Normalized working capital- the size of inventories planned by the enterprise, work in progress and the balance of finished products in warehouses. The working capital stock rate is the time (days) during which the fixed assets are in the production stock. It consists of the following reserves: transport, preparatory, current, insurance and technological. Working capital ratio - the minimum amount of working capital, including cash, required by the company, a firm to build or maintain carry-over inventory and ensure business continuity.
Sources of the formation of working capital can be profit, loans (banking and commercial, i.e. deferred payment), equity (authorized) capital, shares, budget funds, redistributed resources (insurance, vertical management structures), accounts payable, etc.
The efficiency of the use of working capital has an impact on the financial performance of the enterprise. In its analysis, the following indicators are used: the availability of own working capital, the ratio between own and borrowed resources, the solvency of the enterprise, its liquidity, the turnover of working capital, etc. The turnover of working capital is understood as the duration of the successive passage of funds through individual stages of production and circulation.
The following indicators of turnover of working capital are distinguished:
- turnover ratio;
- duration of one turn;
- working capital utilization factor.
Turnover ratio(rate of turnover) characterizes the amount of proceeds from the sale of products on the average cost of working capital. Duration of one turn in days is equal to the quotient of dividing the number of days for the analyzed period (30, 90, 360) to the turnover of working capital. The reciprocal of the turnover rate shows the amount of working capital advanced for 1 rub. proceeds from the sale of products. This ratio characterizes the degree of loading of funds in circulation and is called working capital utilization factor. The lower the value of the load factor of working capital, the more efficient use of working capital.
The main goal of managing the assets of an enterprise, including working capital, is to maximize the return on invested capital while ensuring a stable and sufficient solvency of the enterprise. To ensure sustainable solvency, the enterprise must always have a certain amount of money on the account, actually withdrawn from circulation for current payments. Part of the funds should be placed in the form of highly liquid assets. important task in terms of managing the working capital of the enterprise, it is to ensure the optimal balance between solvency and profitability by maintaining the appropriate size and structure of current assets. It is also necessary to maintain the optimal ratio of own and borrowed working capital, since the financial stability and independence of the enterprise, the possibility of obtaining new loans directly depend on this.
Analysis of the turnover of working capital (analysis of the business activity of the organization)
working capital- these are funds advanced by organizations to maintain the continuity of the production and circulation process and returned as part of the proceeds from the sale of products in the same monetary form with which they began their movement.
To assess the effectiveness of the use of working capital, indicators of turnover of working capital are used. The main ones are the following:
- average duration of one turnover in days;
- the number (number) of turnovers made by working capital during a certain period of time (year, half year, quarter), otherwise - the turnover ratio;
- the amount of employed working capital per 1 ruble of sold products (working capital utilization factor).
If working capital goes through all stages of the cycle, for example, in 50 days, then the first indicator of turnover (average duration of one turnover in days) will be 50 days. This indicator approximately characterizes the average time that passes from the moment of purchase of materials to the moment of sale of products made from these materials. This indicator can be determined by the following formula:
- П - average duration of one turn in days;
- SO - the average balance of working capital for the reporting period;
- P - sales of products for this period (net of value added tax and excises);
- B - the number of days in the reporting period (in a year - 360, in a quarter - 90, in a month - 30).
So, the average duration of one turnover in days is calculated as the ratio of the average balance of working capital to the one-day turnover for the sale of products.
The indicator of the average duration of one turnover in days can be calculated in another way, as the ratio of the number of calendar days in the reporting period to the number of turnovers made by working capital for this period, i.e. according to the formula: P \u003d B / CHO, where CHO is the number of turnovers made by working capital for the reporting period.
The second turnover rate- the number of turnovers made by working capital for the reporting period (turnover ratio) - can also be obtained in two ways:
- as the ratio of sales of products minus value added tax and excises to the average balance of working capital, i.e. according to the formula: CHO \u003d P / CO;
- as the ratio of the number of days in the reporting period to the average duration of one turnover in days, i.e. according to the formula: CHO \u003d V / P .
The third indicator of turnover (the amount of employed working capital attributable to 1 ruble of sold products, or otherwise - the utilization factor of working capital) is defined in one way as the ratio of the average balance of working capital to the turnover for the sale of products for a given period, i.e. according to the formula: CO / R.
This indicator is expressed in kopecks. It gives an idea of how many kopecks of working capital are spent to receive each ruble of proceeds from the sale of products.
The most common is the first indicator of turnover, ie. average duration of one turn in days.
Most often, turnover is calculated per year.
In the analysis, the actual turnover is compared with the turnover for the previous reporting period, and for those types of current assets for which the organization sets standards - also with the planned turnover. As a result of such a comparison, the value of the acceleration or deceleration of turnover is determined.
The initial data for the analysis are presented in the following table:In the analyzed organization, the turnover slowed down, both for standardized and non-standardized working capital. This indicates a deterioration in the use of working capital.
With a slowdown in the turnover of working capital, an additional attraction (involvement) of them into circulation occurs, and during acceleration, working capital is released from circulation. The amount of working capital released due to the acceleration of turnover or additionally attracted as a result of its slowdown is determined as the product of the number of days by which the turnover accelerated or slowed down by the actual one-day sales turnover.
The economic effect of accelerated turnover is that the organization can produce more products with the same amount of working capital, or produce the same volume of products with a smaller amount of working capital.
Accelerating the turnover of working capital is achieved by introducing into production new technology, progressive technological processes, mechanization and automation of production. These activities help to reduce the duration of the production cycle, as well as increase the volume of production and sales.
In addition, to speed up turnover, it is important: the rational organization of logistics and marketing of finished products, the observance of the regime of savings in the costs of production and sale of products, the use of forms of non-cash payments for products that contribute to the acceleration of payments, etc.
Directly in the analysis current activities organizations can identify the following reserves to accelerate the turnover of working capital, which consists in eliminating:
- excess inventories: 608 thousand rubles;
- goods shipped, not paid on time by buyers: 56 thousand rubles;
- goods in safe custody with buyers: 7 thousand rubles;
- immobilization of working capital: 124 thousand rubles.
Total reserves: 795 thousand rubles.
As we have already established, the one-day sales turnover in this organization is 64.1 thousand rubles. So, the organization has the opportunity to accelerate the turnover of working capital by 795: 64.1 = 12.4 days.
To study the causes of changes in the rate of turnover of funds, it is advisable, in addition to the considered indicators of general turnover, to calculate also indicators of private turnover. They refer to certain types of current assets and give an idea of the time spent by working capital at various stages of their circulation. These indicators are calculated in the same way as stocks in days, however, instead of the balance (stock) on a certain date, the average balance of this type of current assets is taken here.
Private turnover shows how many days on average there are working capital in this stage of the cycle. For example, if the private turnover for raw materials and basic materials is 10 days, then this means that from the moment the materials arrive at the organization's warehouse to the moment they are used in production, an average of 10 days pass.
As a result of summing up the private turnover indicators, we will not get the total turnover indicator, since different denominators (turnovers) are taken to determine the private turnover indicators. The relationship between indicators of private and general turnover can be expressed in terms of total turnover. These indicators allow you to establish what impact the turnover of certain types of working capital has on the overall turnover rate. The terms of the total turnover are defined as the ratio of the average balance of this type of working capital (assets) to the one-day turnover for the sale of products. For example, the term of the total turnover for raw materials and basic materials is equal to:
Divide the average balance of raw materials and basic materials by the one-day turnover for the sale of products (excluding value added tax and excises).
If this indicator is, for example, 8 days, then this means that the total turnover due to raw materials and basic materials accounts for 8 days. If we sum up all the terms of the total turnover, then the result will be an indicator of the total turnover of all working capital in days.
In addition to those considered, other turnover indicators are also calculated. So, in analytical practice, the indicator of inventory turnover is used. The number of turnovers made by stocks for a given period is calculated using the following formula:
Works and services (minus and ) divided by the average value for the item "Stocks" of the second section of the balance sheet asset.
The acceleration of inventory turnover indicates an increase in the efficiency of inventory management, and the slowdown in inventory turnover indicates their accumulation in excessive amounts, ineffective inventory management. Indicators reflecting the turnover of capital, that is, the sources of formation of the organization's property, are also determined. So, for example, the turnover of equity capital is calculated according to the following formula:
The sales turnover for the year (net of value added tax and excises) is divided by the average annual cost of equity.
This formula expresses the effectiveness of the use of equity capital (authorized, additional, reserve capital, etc.). It gives an idea of the number of turnovers made by the organization's own sources of activity per year.
The turnover of invested capital is the turnover on sales of products for the year (net of value added tax and excises) divided by the average annual cost of equity and long-term liabilities.
This indicator characterizes the effectiveness of the use of funds invested in the development of the organization. It reflects the number of turnovers made by all long-term sources during the year.
When analyzing the financial condition and the use of working capital, it is necessary to find out from what sources the financial difficulties of the enterprise are compensated. If the assets are covered by sustainable sources of funds, then the financial condition of the organization will be stable not only at this reporting date, but also in the near future. Sustainable sources should be considered own working capital in sufficient amounts, non-reducing balances of carry-over debt to suppliers on accepted settlement documents, the payment deadlines for which have not come, permanently carry-over debt on payments to the budget, a non-reducing part of other accounts payable, unused balances of special purpose funds (accumulation funds and consumption, and social sphere), unused balances of earmarked funds, etc.
If the organization's financial breakthroughs are covered by unstable sources of funds, it is solvent at the reporting date and may even have free cash in bank accounts, but financial difficulties await it in the short term. Unsustainable sources include sources of working capital that are available on the 1st day of the period (the date of the balance sheet), but are absent on dates within this period: non-overdue wage arrears, contributions to off-budget funds (in excess of certain stable values), unsecured debt to banks on loans for inventory items, debts to suppliers on accepted settlement documents, the payment deadlines for which have not come, in excess of the amounts attributed to sustainable sources, as well as debts to suppliers for uninvoiced deliveries, debts on payments to the budget in excess of the amounts attributed to stable sources of funds.
It is necessary to make a final calculation of financial breakthroughs (ie, unjustified spending of funds) and sources of coverage for these breakthroughs.
Analysis ends general assessment the financial condition of the organization and drawing up an action plan to mobilize reserves to accelerate the turnover of working capital and increase liquidity and strengthen the solvency of the organization. First of all, it is necessary to assess the security of the organization with its own working capital, their safety and use according to intended purpose. Compliance is then assessed financial discipline, solvency and liquidity of the organization, as well as the completeness of the use and security of bank loans and loans from other organizations. Measures are planned for more efficient use of both equity and borrowed capital.
The analyzed organization has a reserve for accelerating the turnover of working capital by 12.4 days (this reserve is noted in this paragraph). To mobilize this reserve, it is necessary to achieve the elimination of the causes that cause the accumulation of excess stocks of raw materials, basic materials, spare parts, other inventories and work in progress.
In addition, it is necessary to ensure the targeted use of working capital, preventing their immobilization. Finally, receiving payments from buyers for goods shipped to them that were not paid for on time, as well as the sale of goods that are in safe custody with buyers due to refusal to pay, will also speed up the turnover of working capital.
All this will help to strengthen the financial condition of the analyzed organization.
Indicators of availability and use of working capital
Revolving funds - consumed in one production cycle, materially enter the product and completely transfer their value to it.
The availability of working capital is calculated both on a certain date and on average for the period.
Indicators of the movement of working capital characterize its change during the year - replenishment and disposal.
Working capital turnover ratio
It is the ratio of the cost of products sold for a given period to the average balance of working capital for the same period:
To turnover= Cost of goods sold for the period / Average working capital balance for the period
The turnover ratio shows how many times the average balance of working capital for the period under review turned around. In terms of economic content, it is equivalent to the rate of return on assets.
Average turnaround time
Determined from the turnover ratio and the analyzed period of time
Average duration of one revolution= Duration of the measurement period for which the indicator is determined / Working capital turnover ratio
Coefficient of fixing working capital
The value is inversely proportional to the turnover ratio:
Go to pinning= 1 / To turnover
Consolidation ratio = average working capital balance for the period / cost of goods sold for the same period
In terms of economic content, it is equivalent to the capital intensity indicator. The fixing coefficient characterizes the average cost of working capital per 1 ruble of the volume of products sold.
Need for working capital
The enterprise's need for working capital is calculated on the basis of the coefficient of fixing working capital and the planned volume of sales of products by multiplying these indicators.
Security of production with working capital
It is calculated as the ratio of the actual stock of working capital to the average daily consumption or the average daily need for it.
Accelerating the turnover of working capital helps to improve the efficiency of the enterprise.
A taskAccording to the data for the reporting year, the average balance of working capital of the enterprise amounted to 800 thousand rubles, and the cost of products sold for the year in the current wholesale prices of the enterprise amounted to 7200 thousand rubles.
Determine the turnover ratio, the average duration of one turnover (in days) and the coefficient of fixing working capital.
- To turnover = 7200 / 800 = 9
- Average turnaround time = 365 / 9 = 40.5
- To fixing collective funds \u003d 1/9 \u003d 0.111
For the reporting year, the average balance of working capital of the enterprise amounted to 850 thousand rubles, and the cost of products sold for the year - 7200 thousand rubles.
Determine the turnover ratio and the coefficient of fixing working capital.
- Turnover ratio = 7200 / 850 = 8.47 turnovers per year
- Fixing coefficient = 850 / 7200 = 0.118 rubles of working capital per 1 ruble of sold products
The cost of products sold in the previous year amounted to 2,000 thousand rubles, and in reporting year compared to the previous year increased by 10% with a reduction in the average duration of one turnover of funds from 50 to 48 days.
Determine the average balance of working capital in the reporting year and its change (in%) compared to the previous year.
Solution- The cost of products sold in the reporting year: 2000 thousand rubles * 1.1 = 2200 thousand rubles.
Average balance of working capital = Volume of sold products / Turnover ratio
To turnover \u003d Duration of the analyzed period / Average duration of one turnover
Using these two formulas, we derive the formula
Average balance of working capital = Volume of sold products * Average duration of one turnover / Duration of the analyzed period.
- Average balance Total average in the previous year = 2000 * 50 / 365 = 274
- Average balance Total average in the current year = 2200 * 48 / 365 = 289
289/274 = 1.055 In the reporting year, the average working capital balance increased by 5.5%
A taskDetermine the change in the average coefficient of fixing working capital and the influence of factors on this change.
To secure = average working capital balance / cost of goods sold
- To consolidation by group, base period = (10+5) / (40+50) = 15 / 90 = 0.1666
- To consolidate the group reporting period = (11 + 5) / (55 + 40) = 16 / 95 = 0.1684
Index of the general change in the coefficient of fixation
- \u003d SO (average balance)_1 / RP (sold products)_1 - SO_0 / RP_0 \u003d 0.1684 - 0.1666 \u003d 0.0018
Index of change in the coefficient of consolidation from changes in the average balance of working capital
- \u003d (SO_1 / RP_0) - (SO_0 / RP_0) \u003d 0.1777 - 0.1666 \u003d 0.0111
Index of change in the coefficient of fixing from changes in the volume of sold products
- \u003d (SO_1 / RP_1) - (SO_1 / RP_0) \u003d -0.0093
The sum of the individual indices must equal the overall index = 0.0111 - 0.0093 = 0.0018
Determine the total change in the balance of working capital, and the amount of released (involved) working capital as a result of changing the speed and changing the volume of sales.
- Average change in working capital balance = 620 - 440 = 180 (increased by 180)
General index of change in the balance of working capital (CO) \u003d (RP_1 * prod.1.turnota_1 / days in the quarter) - (RP_0 * prod.1.turnota_0 / days in the quarter)
- Duration of 1 turnover in the reporting quarter = 620*90/3000 = 18.6 days
- Duration of 1 turnover in the previous quarter = 440*90/2400 = 16.5 days
OS change index from changes in the volume of products sold
- \u003d RP_1 * prod.1ob._0 / quarter - RP_0 * prod.1ob._0 / quarter \u003d 3000 * 16.5 / 90 - 2400 * 16.5 / 90 \u003d 110 (increase in the balance of working capital due to an increase in the volume of sales )
Index of changes in fixed assets from changes in the turnover rate of working capital
- = RP_1*prod.1rev._1 / quarter - RP_1*prod.1rev._0/quarter = 3000*18.6/90 - 3000*16.5/90 = 70
ANALYSIS OF THE TURNOVER
CAPITAL
5.1. Indicators
turnover
capital
The term "working capital" (its synonym in domestic accounting - working capital) refers to the current assets of the enterprise. Working capital ensures the continuity of the production process.
In the practice of planning, accounting and analysis, working capital is divided according to the following criteria:
- by functional role in the production process: working capital and circulation funds. Working capital includes inventories (raw materials, materials, fuel), work in progress, semi-finished products own production, Future expenses. circulation funds are finished products and goods for resale, goods shipped, cash, settlements with other enterprises and organizations. Such a division is necessary for a separate analysis of the residence time of working capital in the process of production and circulation;
- on the practice of control, planning and management: standardized working capital and non-standardized working capital. The enterprise may have standards for inventories, semi-finished products of its own production, finished products, goods for resale;
- by sources of working capital formation: own working capital and borrowed working capital. The value of own working capital is determined as the difference between the result of section IV of the balance sheet "Capital and reserves" section I "Non-current assets" and Section III"Losses". Borrowed current assets are formed in the form of bank loans, as well as accounts payable. They are provided to the enterprise for temporary use;
- by liquidity (speed of conversion into cash): absolutely liquid funds, quickly realizable working capital, slowly realizable working capital;
- according to the degree of risk of investing capital:
- working capital from minimal risk investments: cash, short-term financial investments;
- working capital with a low investment risk: accounts receivable (excluding doubtful), inventories (excluding stale), balances of finished products and goods (excluding not in demand);
- working capital with an average investment risk: low-value and wearing items, work in progress, deferred expenses;
- high-risk working capital: doubtful receivables, stale inventories, finished products and goods that are not in demand;
- by material content: objects of labor (raw materials, materials, fuel, etc.), finished products and goods, cash and funds in settlements.
The financial position of the enterprise is directly dependent on how quickly the funds invested in assets are converted into real money.
Accelerating the turnover of working capital reduces the need for them: less stocks of raw materials, materials, fuel, work in progress are required, and therefore, leads to a decrease in the level of costs for their storage, which ultimately contributes to an increase in profitability and an improvement in the financial condition of the enterprise.
The slowdown in turnaround time leads to an increase required amount working capital and additional costs, and hence to the deterioration of the financial condition of the enterprise.
The rate of turnover of funds is a complex indicator of the organizational and technical level of production and economic activities. Working capital ensures the continuity of the production process.
The duration of the funds in circulation is influenced by external and internal factors.
To factors external character include the scope of the enterprise, industry affiliation, the scale of the enterprise, the economic situation in the country and the related business conditions of the enterprise.
Internal factors - price policy enterprises, structure of assets, methodology for estimating reserves.
The turnover rate of working capital is estimated by such indicators as:
1. Turnover ratio, or turnover rate
K about = , (5.2)
where D - the duration of one turnover of working capital (in days);
T - reporting period (in days).
Reducing the turnover time, as already noted, leads to the release of funds from circulation, and its increase leads to an additional need for working capital.
3. Coefficient of fixing working capital
K a =
. (5.3)
SO
Vp
The coefficient of fixing working capital shows the amount of working capital per 1 rub. sold products.
In table. 5.1. the calculation of indicators of turnover of working capital is given.
Table 5.1
Working capital turnover indicators
| Indicators | Previous period | Reporting period | Deviations |
| 1. Revenue from the sale of products, works and services, thousand rubles. | 12 596 | 27 138 | + 14 542 |
| 2. Average balances of all working capital, thousand rubles. | 130 939 | 185 640 | + 54 701 |
| 3. Turnover ratio, number of revolutions | 0,0962 | 0,1462 | + 0,05 |
| 4. Duration of one revolution (days) | 3742,3 | 2462,6 | - 1279,7 |
| 5. Coefficient of fixing working capital | 10,395 | 6,841 | - 3,554 |
As can be seen from Table. 5.1, the turnover of working capital accelerated by 0.05 turnover and amounted to 0.1462 turnover per year, or 2462.6 days, respectively, which should be assessed as a negative fact, since one turnover is equal to 6.84 years.
But at the same time, it should be noted that the turnover of working capital accelerated by 1279.7 days.
The acceleration of capital turnover helps to reduce the need for working capital (absolute release), increase production volumes (relative release) and, therefore, increase profits. As a result, the financial condition of the enterprise improves, solvency is strengthened.
The slowdown in turnover requires the attraction of additional funds to continue the economic activity of the enterprise, at least at the level of the previous period.
the value absolute savings (attraction) of working capital can be calculated in two ways.
Firstly, the release (attraction) of working capital from circulation can be determined by the formula
∆ CO \u003d CO 1 - CO o × K vp, (5.4)
where ∆ SO- the amount of savings (-) or attraction (+) of working capital;
CO 1, CO o- the average value of the working capital of the enterprise for the reporting and base period;
Kvp- growth factor of proceeds from sales of products (in relative units), K vp =
.
Vp1
V p0
At the analyzed enterprise, in accordance with the data in Table. 5.1
∆СО \u003d 185 640 - 130 939 × 2.1545 \u003d - 96468.1 (thousand rubles).
Second, you can use the formula
∆CO = (D L1 - D LO) × V 1 one, (5.5)
where D L1, D LO - the duration of one turnover of working capital in days;
V 1 one. - one-day sales of products (thousand rubles).
Let's calculate the release of working capital at the analyzed enterprise based on the indicators of Table. 5.1:
∆СО = (2462.6 - 3742.3) × 75, 38333 = -96468.1 (thousand rubles),
i.e. at this enterprise, due to the acceleration of the turnover of working capital, 96468.1 thousand rubles were released:
The magnitude of the increase in the volume of production due to the acceleration of working capital (ceteris paribus) can be determined using the method of chain substitutions:
∆V p \u003d (K ob1 - K ob0) × CO 1. (5.6)
At the enterprise under consideration, due to the acceleration of the turnover of working capital, the increase in production amounted to 9282 thousand rubles. (∆V p = + 0.05 × 185 640).
The influence of the turnover of working capital on the increase in profits of the AR can be calculated by the formula
- 794 = 412.72 (thousand rubles)In the article we will consider the turnover of working capital as one of the most important indicators for assessing the financial condition of an enterprise.
Working capital turnover
Working capital turnover (English Turnover Working Capital) is an indicator related to the company and characterizing the intensity of the use of working capital (assets) of the enterprise/business. In other words, it reflects the rate of conversion of working capital into cash during the reporting period (in practice: year, quarter).
The formula for calculating the turnover of working capital according to the balance sheet
Working capital turnover ratio (analogue: fixed asset turnover ratio, K ook) - represents the ratio of sales proceeds to the average working capital.
The economic meaning of this ratio is an assessment of the effectiveness of investing in working capital, that is, how working capital affects the amount of sales proceeds. The formula for calculating the turnover ratio of working capital on the balance sheet is as follows:
In practice, the analysis of turnover is supplemented by the coefficient of fixing working capital.
Coefficient of fixing working capital- shows the amount of profit per unit of working capital. The calculation formula is inversely proportional to the working capital turnover ratio and is as follows:
- shows the duration (duration) of the turnover of working capital, expressed in the number of days required for the payback of working capital. The formula for calculating the turnover period of working capital is as follows:
Analysis of working capital turnover. Regulations
The higher the value of the turnover ratio of working capital, the higher the quality of working capital management in the enterprise. In financial practice, there is no single generally accepted value of this indicator; the analysis must be carried out in dynamics and in comparison with similar enterprises in the industry. The table below shows different kinds turnover analysis.
| Indicator value | Indicator analysis |
| K ook ↗ T ook ↘ | Increasing growth dynamics of the turnover ratio of working capital (decrease in the period of turnover) shows an increase in the efficiency of the use of fixed assets of the enterprise and an increase in financial stability. |
| K ook ↘ T ook ↗ | The downward dynamics of changes in the turnover ratio of working capital (an increase in the period of turnover) shows the deterioration in the effectiveness of the use of fixed assets in the enterprise. In the future, this may lead to a decrease in financial stability. |
| K ook > K * ook | The turnover ratio of working capital is higher than the average industry values (K * ook) shows an increase in the competitiveness of the enterprise and an increase in financial stability. |
Video lesson: "Calculation of key turnover ratios for OAO Gazprom"
Summary
Working capital turnover is the most important indicator business activity of the enterprise and its dynamics directly reflects the financial stability of the enterprise in the long term.
7.4. Indicators of the effectiveness of the use of working capital. Significance and ways to accelerate the turnover of working capital.
The duration of capital in circulation depends on the influence of external and internal factors.
To external factors that do not depend on the activities of the enterprise should be attributed: the economic situation in the country and the associated business conditions, industry affiliation and the scale of the organization's activities.
To internal include factors determined by the activities of the organization itself: pricing policy, asset structure, methodology for estimating reserves, conditions and terms of settlements, logistics system, credit policy.
The economic efficiency of the use of working capital is characterized by their turnover.
turnover negotiable assets is determined based on the time during which the funds make a complete turnover, starting with the acquisition of inventories, their presence in the production process, to the release and sale of finished products and the receipt of money in the organization's accounts.
Turnover is expressed using a system of coefficients:
turnover ratio K rev.;
load factor of current assets per 1 rub. sold products K 3 ;
the duration of one revolution D l;
return on working capital Р ok;
absolute release of working capital;
relative release of working capital.
Turnover rate characterized direct ratiospeed (number of revolutions) for a certain period - year, quarter. This indicator reflects the number of circuits made by the organization's working capital, for example, per year, and characterizes the volume of sales per 1 ruble invested in working capital. It is calculated as the quotient of sales revenue (volume of sold or marketable) products divided by working capital, which is taken as the average amount of working capital for a certain period (usually a year):
To about = BP /FROM OK
An increase in this coefficient means an increase in the number of revolutions and leads to the fact that:
the output or the volume of sales for each invested ruble of working capital grows;
less working capital is required for the same volume of production.
Thus, the turnover ratio characterizes the level of production consumption of working capital. The growth of the turnover ratio, i.e. an increase in the speed of turnover made by working capital means that working capital is used rationally and efficiently. A decrease in the number of turnovers indicates a deterioration in the financial condition of the organization.
Load factor (capital m bone) - the indicator, the reciprocal of the turnover ratio, is used for planning and shows the amount of working capital spent on each ruble of sold (commodity) products. This indicator is also called the coefficient of capital intensity of working capital. It is calculated as follows:
To 3 = C OK / BP = 1 /To about, where
K 3 - load factor.
Since the criterion for evaluating the effectiveness of working capital management is the time factor, indicators are used that reflect the total turnover time, or the duration of one turnover, the turnover rate (days).
Duration one turnover(turnover of working capital), days, is determined by dividing working capital C ok by one-day turnover, defined as the ratio of sales volume or sales proceeds (VR) to the period in days (D):
DL =FROM OK * D/VR
Duration inventory turnover(D TMZ), which shows the time required to convert inventories (raw materials, materials) into finished products and sell them:
D TMZ = C TMZ * D/VR, where
With TMZ - the average volume of the value of inventory.
Durationturnoveraccounts receivable(D DZ) reflects the average time to receive payment from buyers:
D DZ = C DZ * D/VR, where
With DZ - the average value of the amount of receivables.
Duration of accounts payable turnover(D KZ) reflects the average payment period for payments to suppliers for raw materials and materials:
D KZ = FROM KZ * D/VR, where
With KZ - the average value of the value of accounts payable.
Duration of cash flow shows the time from the moment the enterprise pays for inventories until the receipt of proceeds from the sale of products, or is this the period between payments for raw materials and labor and the repayment of receivables:
D DC = D TMZ + D DZ - D KZ .
Each business entity sets itself the task of reducing the duration of cash turnover, which will allow it to increase profits and reduce the need for additional financial resources.
Thus, the duration of the turnover of funds can be reduced due to:
Reducing the duration of the turnover of inventory;
Reducing the duration of the turnover of receivables;
Increase the period of circulation of accounts payable.
These indicators provide an opportunity to conduct an in-depth analysis of the use of own working capital; they are called private indicators of turnover.
Comparison of turnover and load ratios in dynamics allows you to identify trends in changes in these indicators and determine how efficiently and effectively the working capital of the organization is used.
The turnover of working capital can accelerate and slow down. When the turnover slows down, it is necessary to involve additional funds. The effect of accelerated turnover is expressed in a reduction in the need for working capital in connection with the improvement of their use, their savings, which affects the increase in production volumes and, as a result, financial results. The acceleration of turnover leads to the release of part of the working capital (material resources, cash), which are used either for the needs of production or for accumulation in the current account. Ultimately, the solvency and financial condition of the organization (enterprise) improves.
The release of working capital as a result of accelerating their turnover can be absolute and relative. Absolute release - this is a direct decrease in the need for working capital to fulfill the planned volume of production. Relative release working capital occurs in those cases when, in the presence of working capital, within the planned needs, an overfulfillment of the production plan is ensured. At the same time, the growth rate of production volume outstrips the growth rate of working capital balances.
A generalizing indicator of the effectiveness of the use of working capital is an indicator of its profitability(P ok), calculated as the ratio of profit from sales of products (P rp) to the average working capital (C ok):
R OK = P rp *100 / FROM OK
Working capital management is important in solving the key problem of the financial condition: achieving the optimal ratio between the growth of production profitability (maximizing profit on invested capital) and ensuring sustainable solvency, which serves as an external manifestation of the financial stability of the organization. It is also extremely important to ensure the reserves and costs of the organization (enterprise) with sources of their formation and maintaining a rational ratio between own working capital and borrowed resources directed to replenish working capital.
One of the main tasks of rational management of current assets of an enterprise is to reduce the periods of inventory and receivables turnover as much as possible and increase the average period for paying accounts payable in order to reduce current financial needs by generally accelerating the turnover of working capital.
This goal is served by the following methods of refinancing the receivables of an enterprise (accelerating its conversion into monetary assets):
Spontaneous funding- assignment of discounts to buyers for reducing the terms of calculation (when paying for the goods before the expiration of a certain period, the buyer receives a discount from the price, after this period - keeping within the contractual payment period - he pays the full amount).
Accounting for bills- sale of bills of exchange available at the enterprise to the bank at a discount price (below face value); the size of the discount held by the bank depends on the face value of the bills, their maturity and the discount rate of the bill (if the issuer's solvency is questionable, the discount rate may include a risk premium).
Factoring- concession by the seller enterprise to the bank (or a specialized "factor firm") of the right to receive funds under payment documents for the delivered products, while the bank (factor firm) reimburses the seller enterprise for the main part of the debt amount under such payment documents, charging a certain percentage commission depending on the risk factor, on the solvency of the buyer of the product and the stipulated terms of its payment.
Ways to increase the turnover of working capital:
Reducing the duration of the production cycle;
Increase in sales;
Ordering and choosing the form of settlements with suppliers and consumers (including through payment calendars);
Prevention of excess stocks of raw materials, materials, and other inventory items;
Reducing accounts receivable and determining an effective credit policy at the enterprise (through promissory notes);
Reducing accounts payable (payment calendar);
Strict accounting and regulation of all elements of the working capital of the enterprise.
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