The degree of efficiency of use working capital characterize the following main indicators: turnover ratio; the duration of one revolution; working capital loading.
Turnover ratio(K0) is determined by dividing the volume of sales of products in wholesale prices(RP) on the average balance of working capital at the enterprise (SO):
RP
K,=_. (6.10)
The turnover ratio characterizes the number of circuits made by the working capital of the enterprise for a certain period (year, quarter), or shows the volume of sales per 1 rub. working capital. It can be seen from the formula that an increase in the number of revolutions leads either to an increase in output by 1 rub. working capital, or to the fact that for the same volume of production it is required to spend a smaller amount of working capital.
The value of the working capital utilization factor (K,) is the inverse of the turnover ratio. This indicator characterizes the amount of working capital spent on 1 rub. products sold:
K3=-. (6.11)
RP
The duration of one turnover (in days) is found by dividing the number of days in the period (D) by the turnover ratio (Ko):
(6.12)
O
The shorter the duration of the turnover or the greater the number of circulations made by working capital with the same volume of products sold, the less working capital is required, and vice versa, the faster working capital makes a circuit, the more efficiently they are used.
The turnover of working capital characterizes the efficiency of their use. The duration of the turnover depends on the amount of stocks, the cost of their storage, the formation of the amount of profit. However, when determining the turnover ratio, a number of issues need to be addressed.
Firstly, what method should be used to calculate the turnover rate: by the ratio of the cost of sales to the average (average annual) balances of working capital or by the ratio of the costs of production and marketing of sold products to the average (average annual) balances of working capital?
Secondly, when calculating the duration of turnover in days, the number of days in a year is taken to be either 360 or 365-366, which leads to comparability of turnover ratios.
Third, don't issue resolved how to evaluate sold products when calculating the turnover rate: in current prices or in comparable prices; with sales taxes or without sales taxes?
Fourth, when calculating the turnover rate of working capital for the sale of products, the latter is calculated at current or comparable prices, and the average (average annual) balances are taken into account at cost.
Determining the turnover of working capital at the cost of sales leads to the fact that in enterprises where the cost of production increases, the turnover ratio also increases, that is, the duration of one turnover is reduced; with a decrease in cost, on the contrary, the turnover slows down and the duration of one turnover increases. This is contrary to the task of increasing the efficiency of production, and primarily by reducing costs.
The established practice of using 360 days instead of 365 or 366 in calculations overestimates the turnover ratio.
If we calculate the turnover rate in current prices, then it is not comparable in dynamics. Therefore, it is advisable to use the cost of sold products when calculating performance indicators in comparable prices. At the same time, sales taxes (VAT, excises, etc.) should be excluded from the cost of sales, since they do not take part in the formation of working capital, profit, asset turnover.
Comparability of turnover indicators at various enterprises and at a single enterprise in the absence of a unified methodology for calculating this indicator is practically impossible. In this case, it is impossible to identify and quantify the influence of individual factors on the change in turnover and the duration of one turnover when developing measures to manage current assets that increase the efficiency of their use.
The effect of accelerating the turnover of working capital is expressed in the release, reducing the need for them in connection with the improvement of their use. There are absolute and relative release of working capital.
The absolute release reflects a direct reduction in the need for working capital.
Relative release reflects the change in both the amount of working capital and the volume of products sold. To determine it, you need to calculate the need for working capital for the reporting year based on the physical turnover for the sale of products for this period and the turnover for the previous year. The difference between these indicators gives the amount of release of funds.
The amount of released working capital (B) is determined by the formula
P Wr(Add“Add) !C\3\
B = , (6.13)
Up
where Вр - proceeds from the sale of products in the reporting period, rubles; D "ob and D20b - the average duration of turnover in the base and planned period, days; Dp - the duration of the billing period, days.
Efficient use of working capital plays an important role in ensuring the normal operation of the enterprise, increasing the level of profitability of production. Unfortunately, the own financial resources currently at the disposal of enterprises cannot fully ensure the process of not only expanded, but also simple reproduction. Lack of necessary financial resources, low level payment discipline led to the emergence of mutual non-payments.
Mutual indebtedness of enterprises is a characteristic feature of the economy in transition. A significant part of the enterprises failed to quickly adapt to the emerging market relations, irrationally uses the available working capital, and does not create financial reserves. It is also important that in the conditions of inflation and instability of economic legislation, non-payments have entered the sphere of commercial interests of a number of enterprises that deliberately delay settlements with suppliers, and thereby actually reduce their payment obligations due to a decrease in the purchasing value of the ruble.
Accelerating the turnover of working capital is a priority for enterprises in modern conditions and is achieved in the following ways.
At the stage of creating inventories - the introduction of economically justified norms of the reserve; bringing suppliers of raw materials, semi-finished products, components, etc. closer to consumers; widespread use of direct long-term connections; expansion of the warehouse logistics system, as well as wholesale trade materials and equipment; complex mechanization and automation of loading and unloading operations in warehouses.
At the stage of work in progress - acceleration of scientific and technical progress(introduction of advanced equipment and technology, especially waste-free and low-waste, robotic complexes, rotor lines, chemicalization of production); development of standardization, unification, typification; improvement of the forms of organization of industrial production, the use of cheaper structural materials; improvement of systems of economic incentives, economical use of raw materials and fuel and energy resources; increase specific gravity products in high demand.
At the stage of circulation - the approach of consumers of products to its manufacturers; improvement of the settlement system; increase in the volume of sold products due to the fulfillment of orders through direct communications, early release of products, production of products from saved materials; careful and timely selection of shipped products by batches, assortment, transit rate, shipment in strict accordance with the concluded contracts.
Business leaders are increasingly pushing project completion to the later stages of the operational phase by employing skilled project managers to complete unique business challenges. This is because the results of the project are reasonably associated with the success of operating profit generation. However, the more complex the task, the wider the range of the concept of its effectiveness, which includes not only profitability, but also a host of other indicators. Among them, indicators of the efficiency of the use of working capital play a prominent role.
Overview of working capital
In essence, any operational activity can be considered by us as a continuing operational phase of an investment project, and any existing business as a project implementation. This means that we definitely need to learn how to look at business systematically, perceiving it as a living organism and a large-scale set of enterprise performance indicators.
At the same time, in the static aspect, one should take into account not only the passive part of the balance sheet (sources of funds), but also the active part (funds and their placement). And if project managers still understand the nature of efficiency capital investments, embodied in non-current assets, the fate and opportunities for optimizing current assets is often a mystery. Current assets is an accounting term of the economic category, which, depending on managerial intonations, is also referred to as:
- current assets (ObA);
- current funds;
- working capital (OBS);
- working capital or capital.
The main economic content of these funds is that they literally turn over the production cycle, transferring their consumer value to finished products (services, works) in full. This transfer confirms the calculation of the cost of production. Unlike current assets, non-current assets lose their value and value gradually in the course of a long economic cycle. And the balances of both of them together make up the total of the assets of the balance sheet of the enterprise. I invite you to take a look at the structure of the main reporting document.
Company balance sheet structure
The composition of current assets from the second section of the enterprise's balance sheet is highlighted in blue in the diagram. Working capital consists of fixed and variable current assets. The company operates in the active and in the "dead" seasons. In the "dead" period, when there is no revenue or it is minimal, the enterprise is forced to use constant OA, which it cannot but spend to maintain life. Variable current assets are directly related to production activities, and their consumption depends on the volume of production and sales. Indicators of the efficiency of the use of working capital are divided into groups.
- General corporate performance indicators of OA.
- Performance indicators of OA for significant items of assets.
General indicators of the effectiveness of OA
Working capital efficiency indicators used for analysis at the level of the entire enterprise use two documents for the initial calculation data: the company's balance sheet and Form No. 2 report. The calculation of indicators is carried out to assess the "removal" of revenue, profit from one ruble revolving funds, and on the basis of the criterion of sufficiency of own funds - to ensure optimal structure Both. This type of indicators is divided into three groups.
- Turnover indicators OA and its derivatives.
- OA profitability.
- CHOK (pure working capital).
The turnover criteria and indicators derived from it include four parameters that examine the issue of the ratio of sales volume and the amount of working capital involved for these purposes. The composition of this group of indicators is as follows:
- turnover ratio OA;
- coefficient of productive utilization of current assets;
- turnaround time;
- criterion of relative and absolute release of OA.
Formulas for the turnover of current assets and its derivatives
The calculation of indicators related to turnover is performed according to the formulas presented above. The load factor and the turnover period are the reciprocals of the turnover. When the volumes of production and sales of the enterprise grow, and the turnover of current assets accelerates, there is an effect of the relative release of working capital. Its relativity lies in the fact that there is no actual withdrawal of current assets on the balance sheet. The calculation of the absolute release is carried out under the condition of constant sales volumes, while comparing the balances of OA at the end of the period with their planned or base values.
The calculation of the profitability of current assets allows you to evaluate information about how much profit falls on 1 ruble of working capital. In order to assess the company's own capabilities to maintain the required level of current assets, the NCF indicator is used. He answers the question: enough or not equity, long-term liabilities and long-term borrowed capital to cover not only non-current assets, but also current funds.
Profitability formulas for current assets and PFC
OA performance indicators by item
Calculation of the parameters of the effectiveness of OA is needed in order to find their optimal level in the current and strategically planned situation. Below is a graph of the relationship between the financial result of the enterprise and the size of current assets. Suppose there is little working capital: not enough inventory, money and receivables (RD). What losses could this cause? Let's trace the logic: there are few stocks of materials → a low level of balances of finished (commercial) products in warehouses → we cannot serve the client → lost revenue and reduced profit.
Graph of the dependence of the size of profit on the level of current assets
The reverse situation is also possible, when working capital is excessive. What are the possible losses in this case? Excess balances of material values (inventory and materials), inefficient receivables, excess reduction in debt to creditors, etc. How to find the optimal OBA size? I propose to do this empirically, i.e. selection of the optimal combination of available funds: target values performance indicators, credit policy, etc. This topic is very voluminous, so I will limit myself to the composition of the criteria:
- investment in reserves (calculation of the volume Money advanced for the formation of stocks of goods and materials);
- an indicator of an estimation of the optimum size of the order;
- annual cost of storage;
- coefficient of diversion of OA into accounts receivable;
- DZ turnover;
- the average period of collection of DZ;
- collection coefficient;
- coefficient of efficiency of capital investment in receivables;
- the effect obtained from the reduction of remote sensing;
- return on cash flow;
- debt coverage ratio;
- cash flow liquidity ratio.
In my opinion, it is possible to operate effectively with only three items in the OA section of the balance sheet: stocks, DZ and cash flows. IN successful management DZ plays an important role in the development of a credit policy that answers the question: under what conditions and to what extent can we afford to lend to customers by forming DZ? The following is a diagram of the main methods of working with the effectiveness of OA.
Scheme of methods for improving the efficiency of used OA
Concluding this article, I will once again emphasize the growing importance of the orientation of project managers in terms of the effectiveness of working capital. The time is not far off when process management will give way to the project paradigm completely. IN information society With the proper level of automation, this is very likely. But even now it is time for PM to actively understand the parameters of operating activities and the balance sheet structure of current funds.
LECTURE 2
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 scope of the organization.
TO internal include factors determined by the activities of the organization itself: price policy, structure of assets, methodology for estimating reserves, conditions and terms of settlements, system of logistics, credit policy.
The economic efficiency of the use of working capital is characterized by their turnover.
Turnover of current 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:
The turnover ratio K about;
The load factor of current assets per 1 rub. sold products Kz;
Duration of one revolution D l;
Return on working capital Р ok;
Rate of turnover characterized direct turnover ratio (number of turnovers) 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):
An increase in this coefficient means an increase in the number of revolutions and leads to the fact that:
Grows output or sales volume for each invested ruble of working capital;
For the same volume of production, less working capital is required.
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 intensity)- 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 (commercial) products. This indicator is also called the coefficient of capital intensity of working capital. It is calculated as follows:
Where K 3 - load factor.
The data obtained show that the organization has seen an increase in the efficiency of the use of working capital. This positive shift was reflected in the acceleration of the turnover of working capital.
Since the criterion for evaluating the effectiveness of working capital management is the time factor, indicators are used that reflect total time turnover, or duration of one revolution, turnover rate (days).
The duration of one turnover is the sum of the time spent by working capital in the sphere of production and the sphere of circulation, starting from the moment of acquisition of inventories and ending with the receipt of proceeds from the sale of products produced by the organization. In other words, the duration of one revolution covers the duration production cycle and the amount of time spent on the sale finished products This is the period during which the working capital of the organization go through all stages of the cycle.
Duration of one turn(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 (BP) to the period in days (D):
Ceteris paribus, the shorter the circulation period or one turnover of working capital, the organization needs less working capital. The faster working capital makes a circuit, the better and more efficiently they are used. Thus, the time of capital turnover affects the need for total working capital and its reduction becomes the most important direction for increasing the efficiency of working capital use.
When managing working capital, one should consider the duration of the turnover of individual elements of current assets.
Duration of inventory turnover(Dtmz), which shows the time required to convert inventories (raw materials, materials) into finished products and sell them:
Where Stmz - the average volume of the value of inventory.
The duration of the turnover of receivables(DDZ) reflects average term receiving payment from buyers:
Where Sdz- average value of accounts receivable.
Duration of accounts payable turnover(Dkz) reflects the average payment term for payments to suppliers for raw materials and supplies:
Where Skz- the average 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 this is the period between payments for raw materials and labor force and repayment of accounts receivable:
Dds = Dtmz + Ddz - Dkz.
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 slowing down the turnover, 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 working capital ( material resources, cash), which are used either for the needs of production or for accumulation in a 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 (С 0К):
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 financial stability organizations. 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 its own working capital and borrowed resources directed to replenish working capital.
The most important part of the financial resources of the enterprise are its current assets. They include stocks (raw materials, materials, low-value and wearing items, finished products, goods shipped, work in progress, etc.); cash (funds on current and foreign currency accounts, at the cash desk, etc.); short-term financial investments(securities, provided short-term loans, etc.); accounts receivable (debt of buyers and customers, subsidiaries and affiliates, founders on contributions to authorized capital, bills on behalf, etc.).
The success of the production cycle of the enterprise depends on the state of current assets, since the lack of working capital paralyzes production activities, interrupts the production cycle and ultimately leads the company to the inability to pay for its obligations and to bankruptcy.
Their turnover has a great influence on the state of current assets. It affects not only the size of the minimum required for economic activity working capital, but also the amount of costs associated with the possession and storage of stocks, etc. In turn, this affects the cost of production and, ultimately, the financial results of the enterprise. All this necessitates constant monitoring of current assets and analysis of their turnover.
The following indicators are analyzed:
turnover of current assets of the enterprise;
Accounts receivable turnover;
Inventory turnover.
The main attention is paid to the calculation and analysis of changes in the rate of turnover of current assets (the number of turnovers of assets for a certain period of time) and the period of turnover (the period of return to the enterprise of funds invested in economic activity).
Analysis of turnover of current assets is carried out on the basis of the calculation of the following indicators:
Turnover Revenue from sales
current assets = ------------- .
(turnover speed) Average value
current assets
This indicator characterizes the rate of turnover of current assets of the enterprise. The average value of assets is calculated as the arithmetic average of assets at the beginning and end of the period, i.e.
This indicator characterizes the additional attraction (release) of funds into circulation, caused by a slowdown (acceleration) of asset turnover.
Analysis of accounts receivable turnover. The following indicators are used for this:
This indicator characterizes the multiplicity of the excess of sales proceeds over the average receivables;
The indicator characterizes the term of buyers' settlements that has developed over the period;
The indicator characterizes the structure of current assets;
Inventory turnover analysis is based on the following indicators:
The indicator reflects the speed of inventory turnover;
The indicator characterizes the duration of storage of stocks. The set of indicators given gives a certain opportunity to characterize the state of current assets and their dynamism.
LECTURE №3
METHODS AND MODELS FOR DETERMINING THE NEED FOR WORKING ASSETS
Traditional Methods determining the need for working capital
The effectiveness of the organization's activities largely depends on the correct determination of the need for working capital.
Rational availability of working capital leads to minimization of costs, improvement of financial results, to the rhythm and coherence of the organization's work.
An overestimation of the need for working capital leads to their excessive diversion into reserves, to freezing and deadening of resources, and slowing down turnover. In addition, it is expensive for the business entity, as there are additional costs for storage and warehousing and property tax increases.
An underestimation can lead to interruptions in the production and sale of products, untimely fulfillment by the organization of its obligations, and ultimately to loss of profit. In both cases, the result is an irrational use of resources, leading to a loss of financial stability.
The specific size of working capital is determined by the current need and depends on the nature and complexity of production, the duration of the production cycle, seasonality of production, production growth rates, changes in the conditions of logistics and sales of products, the procedure for settlements and the organization of settlement and cash services, the financial capabilities of the organization, the frequency and timing of receipt of payments, etc.
The organization's current need for working capital is determined by means of their rationing, which is the most important element in managing the formation and use of current assets.
Rationing is the process of establishing the optimal amount of working capital necessary for the normal economic activity of the organization. Rationing of working capital - the subject of internal financial planning. Through rationing, financial services determine the need for their own working capital in a minimum but sufficient amount, which ensures the fulfillment of planned tasks and the continuity of the reproduction process.
Rationing is carried out by calculating the norms and standards for each element of working capital.
Norm- this is a relative indicator expressing the volume of stocks of material assets necessary to ensure normal operation, and calculated in stock days, rubles and percentages.
standard working capital is the monetary expression of the stock of material assets, the minimum necessary for the rhythmic work of an economic entity.
Determining the need for working capital is closely related to the production plan and the planned cost estimate for production. In the production plan, issues are worked out on which the provision of production with all types of resources depends. On the base production plan a cost estimate for the production of products is developed, in which the cost of production is planned. It is the cost estimate that forms the basis for determining the need for working capital.
There are several methods for calculating working capital ratios: analytical, coefficient and direct counting method.
Analytical(experimental-statistical) method an enlarged calculation of working capital is carried out in the amount of their average actual balances. This method is used when there are no significant changes in the operating conditions of the organization and when the funds invested in material values and stocks, have a large specific gravity.
When calculating the planned need for working capital, the analytical method takes into account, firstly, the planned growth in revenue from sales of products and, secondly, the acceleration of the turnover of working capital.
Based on the planned acceleration of the turnover of working capital (in this case, the reduction in the duration of one turnover in days), the planned value of the working capital ratio (load factor) is determined:
Knowing the planned working capital utilization factor and the growth rate of product sales (sales proceeds), calculate the amount of the organization's working capital in the planning period:
Ratio method is based on the definition of a new standard of working capital on the basis of the existing one, taking into account amendments for the planned change in the volume of production and sales of products, for accelerating the turnover of working capital. When applying this method, all stocks and costs of the organization are divided into:
Dependent on changes in the volume of production - raw materials, materials, costs of work in progress and finished products in stock;
Not dependent on the growth of production volume - spare parts, tools, inventory, deferred expenses.
Depending on the volume of production of elements of working capital, the need is planned based on their size in the base year, the growth rate of production and the possible acceleration of the turnover of working capital.
For the remaining elements of stocks and costs, the planned requirement is determined at the level of their average actual balances.
The calculation of the need for working capital for group I takes into account the growth rate of production volumes in the planned period and the planned acceleration of the turnover of working capital:
The calculation for group II of working capital takes into account only the planned change in the turnover of working capital:
Direct Count Method the most accurate, justified, but at the same time quite laborious. It is based on the definition of scientifically based stock standards for individual elements of working capital and the standard of working capital, i.e. the cost expression of the stock, which is calculated both as a whole and for each element of the normalized working capital. Direct account method - the main method for determining the planned need for working capital.
The normalization process includes:
Development of stock standards for certain types of standardized inventory items;
Determination of private standards for each element of working capital;
Calculation of the aggregate standard for own normalized working capital.
Along with planning (rationing), the need for working capital and the calculation of the total standard are carried out forecast calculations that model like the future financial position organization, and the state of its own working capital.
Working capital norms - this is the volume of stock for the most important inventory items necessary to ensure the normal, rhythmic work of the organization. Norms are relative values that are set in days of stock or as a percentage of a certain base (commodity products, volume of fixed assets) and show the duration of the period provided by this type of stock of material resources. As a rule, they are established for a certain period of time (quarter, year), but they can also be valid for a longer period. The norms are revised with fundamental changes in the range of products, conditions of production, supply and marketing, changes in prices and other parameters.
The norms are established separately for the following elements of normalized working capital:
production stocks;
Work in progress and semi-finished products of own production;
Stocks of finished products in the warehouse of the organization. Consider the calculation of norms on the example of inventories
and finished products.
Norm in days for production stocks(raw materials, basic materials, purchased semi-finished products) is established for each type or group of materials and includes the time required for:
Unloading, acceptance, storage and laboratory analysis (preparatory stock);
Finding raw materials and materials in the warehouse in the form of stock for the current production process (current stock) and insurance or guarantee stock (safety stock);
Preparations for production related to raw material holding, drying, heating, settling and other similar operations (technological reserve);
Finding materials in transit and time of workflow (transport stock).
The main industry is current warehouse stock, those. the time that inventories are in the warehouse of an organization (enterprise) between two regular deliveries. The volume of the current warehouse stock is directly related to the frequency and uniformity of supplies (supply cycle) and the frequency of launching raw materials and materials into production. The volume of this stock in the industry is set at 50% of the average supply cycle, an average of about 10 days.
Next in importance is insurance stock, necessary in cases where there are failures in the conditions and terms of delivery, incomplete batches are received, the quality of the supplied materials is violated. The amount of safety stock is set within 1/2 of the warehouse stock (5 days). On average, the same duration is transport stock, formed in the event of a discrepancy in the timing of the movement of the document flow and payment for them and the time the materials are in transit.
The general stock rate for raw materials, basic materials, purchased semi-finished products consists of the listed types of stocks.
Norms are also calculated for other types of inventories - auxiliary materials (fuel, packaging, packaging materials, spare parts), for low-value and wearing items. Their definition has its own specifics.
Stock standards for finished products are calculated separately for finished products in the warehouse and for shipped products for which settlement documents have not been submitted to the bank. Inventory rates are determined for each nomenclature group of products, taking into account time:
Selection certain types and brands of products;
Packaging and labeling;
Storage in a warehouse before shipment;
Completion of products to the transport party;
Loading, transportation and delivery from the warehouse to the station of departure;
Preparation of settlement documents and their delivery to the bank.
After establishing the norms of stocks, it is determined private cost standard for each element of normalized working capital. Working capital ratio shows the minimum required amount of funds to ensure the economic activity of the organization. In other words, this is the monetary expression of the planned stock of inventory items.
Basically a private standard for a separate element of own working capital Nel.os is calculated according to the following scheme:
Inventory standard(N pz):
N PZ = N PZ with software,
Where N PZ- the norm of industrial stocks (in days of stock);
With PZ- one-day consumption of inventories, calculated by the formula:
Work in progress standard(H NP): H NP = N NP with VP,
Where N NP - the rate of working capital for work in progress;
With VP - one-day costs for the production of gross output.
The rate of working capital for work in progress is set based on the duration of the production cycle (P c) and the degree of readiness of products, which is expressed through the cost escalation factor K n. This coefficient characterizes the degree of product readiness and is due to the fact that production costs are not carried out simultaneously, but throughout the entire production cycle, and subsequent costs are added to the initial ones. The cost escalation factor is always greater than 0 and less than 1.
One-day costs for the production of gross output are calculated by the formula
Working capital ratio for finished products(N GP):
N GP = N GP B TP,
Where N GP - the rate of working capital for finished products;
B TP - one-day release of marketable products IV quarters:
Calculation standard for deferred expenses(N r.bp) consists of deferred expenses at the beginning of the year (R bp.n.g) and expenses in planning year (R bp.pl) minus deferred expenses charged off as expenses in the planning period (R bp.sp):
N r.bp = R bp.n.g + R bp.pl - R bp.sp.
The normalization process is completed by setting total working capital ratio(Nose) by adding private standards: for inventories, work in progress, deferred expenses and finished products:
N os \u003d N pz + N np + H r.bp + N gp.
The rationing of inventories, work in progress, the balance of finished products in the warehouse is the management of material working capital, diverted from the turnover of the organization during the production (technological) cycle. Organizations are important both for the production of products and for the organization of finances. The financial policy of managing these material assets is to reduce running costs for their maintenance, in establishing the lower limit of the required volume of their stocks, in their timely and optimal replenishment, in controlling their movement.
Management of non-standard working capital. Non-standardized working capital includes circulation funds with the exception of finished products in the warehouse of the organization. The need of the organization (enterprise) for these working capital is determined by calculation, they are managed with the help of short-term lending.
The organization calculates the need for cash on hand, in working capital for stocks of goods (for organizations using the cash method). The method of their calculations is similar to normalization. For example, the need for working capital for stocks of goods is calculated as the product of the norm of the stock of goods by the one-day turnover of goods in the IV quarter at purchase prices, the need for cash at the checkout is multiplied by the norm of the stock of cash by the one-day turnover of the TV quarter. However, this need, in comparison with the regulation, is not so rigidly established, and as a result of the changes, the uninterrupted production process is not disturbed.
When calculating stock shipped goods the financial services of the organization track, firstly, shipped goods, the payment deadline for which has not come, and secondly, shipped, but not paid for on time (most often due to lack of funds from the buyer) or in safe custody from the buyer (due to a high percentage of rejects, deviations from a predetermined assortment, etc.).
For the first group of goods shipped, the proceeds should actually go to the account of organizations. However, between the moment of shipment of the goods and the receipt of proceeds on the settlement account of the organization, there is a pause during which the funds fall out of the production process, and therefore, in current management working capital, it is important to shorten this interval as much as possible and accelerate the flow of funds.
The presence of shipped goods in the second group indicates violations of contractual, settlement and cash discipline and is extremely unprofitable for the enterprise, since a long-term diversion of funds from circulation requires a regrouping of financial resources, a redistribution of working capital, and attraction of additional financial resources in the form of loans. All this entails the tension of the financial condition of the organization, reducing its solvency.
EOQ (Economic Ordering Quantity) optimal lot size model
The inventory management process is carried out by solving the following tasks:
Definitions optimal batch order;
Determination of the moment of placing an order;
Classification and control of stocks;
Optimization of inventory holding costs.
After the product is sold, the company must calculate its cost. Inventories for the production of sold products are presented in the income statement as an expense for the period, and the amount under the item "stocks" in the balance sheet is reduced by this amount. There are four methods that can be used to determine the cost of sales and inventory valuation: 1) individual valuation (specific identification),
2) at the cost of the first purchases (First-In, First-Out, FIFO),
3) by the cost of the latest purchases (Last-In, First-Out, LIFO), 4) average cost.
Individual assessment method Using this method stocks are estimated on the basis of individual cost accounting for each specific unit of production. After the sale of this unit of production, the value of inventory decreases in accordance with the costs related to it. The method is used when accounting for expensive items, the sale of which is rather slow, such as in the case of car sales.
FIFO Method The FIFO method assumes that inventories are consumed in the same sequence in which they are purchased by the enterprise. As a result, the cost of goods sold is determined based on the prices of the earliest purchases of raw materials, and inventories are calculated at the prices of later purchases. The assumption of the sequence of replenishment and consumption of stocks is purely speculative; in reality, raw materials can come into production from batches purchased by the enterprise at different times.
LIFO Method The LIFO method is the opposite of the FIFO method. In this case, the cost of goods sold is determined at the prices of the latest purchases, and inventory is estimated at the prices of early purchases.
Average cost method. This method involves determining the weighted average price of a unit of inventory, which is then used to calculate the cost of goods sold. The cost of goods sold and the cost of inventory remaining calculated in this way occupy an intermediate position between similar indicators calculated using the FIFO and LIFO methods.
Cash receipts, excluding tax payments, do not change depending on the choice of inventory method, while balance sheet indicators, including reported profit, change during inflation. FIFO gives the lowest estimate of cost of goods sold and therefore the highest net profit. In addition, when using the FIFO method
the value of reserves is the largest compared to those calculated by other methods, which leads to an increase in the company's liquidity indicators, such as working capital and current ratio. On the other hand, the LIPO method gives the highest cost estimate, the lowest profit margin, and the lowest level of liquidity. If we take into account the need to pay taxes, then the possibilities for reducing tax payments are highest with the LIFO method, that is, it assumes the smallest tax burden. As a result, post-tax cash receipts using this method are the highest.
Of course, such results are typical only for a situation of constant increase in costs. If costs are constant over a period, then cost of goods sold, valuation of inventory balances, taxes, and cash flows will not change depending on the valuation method. But, since the problem of inflation has not ceased to be relevant over the past 20 years, most firms prefer to use the LIFO method.
The main prerequisites on which the EOQ model is built, namely: - part of the costs increases with the growth of inventory, while the other part decreases;
The optimal order size (and associated average inventory) is the one that minimizes total cost.
First of all, as noted earlier, the average inventory depends on the frequency of orders placed and the size of each order: if the inventory is updated daily, the average inventory will be much lower than if the order is placed once a year. On the image
Rice. Determining the optimal order lot
it is shown that inventory costs increase with order volumes: high order volumes mean an increase in average inventory, and hence an increase in storage costs, lost return on investment in inventory, insurance costs and markdown losses. In contrast, order placement and fulfillment costs decrease with increasing lot size, order placement costs, vendor setup costs, and order processing costs decrease as order frequency decreases, resulting in increased inventory.
If we add the schedules of inventory holding and order fulfillment costs shown in Figure 1, their sum will be a total inventory holding cost (TIC) schedule. The point at which the TIC value reaches its minimum value determines the optimal lot size (EOQ). Q(ordered quantity) and equating the result to zero, we get
From the resulting equation we find the value Q
Where F- fixed costs for placing and fulfilling one order; S- annual inventory requirement WITH- annual costs of storage, expressed as a percentage of the cost of average stocks; R- purchase price of a unit of inventory
This model is based on the following assumptions:
1) the annual inventory requirement (annual sales volume) can be accurately predicted,
2) sales volumes are evenly distributed throughout the year,
3) there are no delays in receiving orders.
Note also that the value of EOQ, and hence also the average size stocks will vary depending on the volume of sales. With an increase in the volume of sales, inventories also increase, but not in the same proportion, that is, the ratio of stocks to sales volume tends to decrease if the firm's activities expand. The principle of returns to scale also applies to stocks.
Fig..- Dynamics of stocks without taking into account the safety stock
1 - maximum margin; 2 - the rate of decrease in stocks; 3 - average stock, 4 - reorder point
Rice. - Dynamics of stocks, taking into account the safety stock.
1 - maximum margin; 2 - average rate of decrease in stocks; 3 - order point; 4 - safety stock; 5 - maximum speed declining stocks.
Moderate inflation, say 3% per year, may not be taken into account when making stock decisions, but if it is high, then it should be taken into account.
Given the possibility of a delivery delay, the question arises of the risk of a company running out of inventory that will ensure business continuity during the delay. The issue of determining this size of the stock is important in the inventory management system. When creating reserve stocks, storage costs will increase, and the costs associated with the occurrence of a shortage of goods will decrease.
The reorder point is the amount of stock in the warehouse at which it is necessary to place the next order. The reorder point depends on the size of the safety stock, the daily consumption of this type of stock, and the lead time.
Improving the use of working capital with the development of entrepreneurship is becoming increasingly important, since the material and monetary resources released in this case are additional internal source further investment. Rational and efficient use of working capital helps to increase the financial stability of the enterprise and its solvency. Under these conditions, the enterprise timely and fully fulfills its settlement and payment obligations, which allows it to successfully carry out commercial activities.
The efficiency of the use of working capital is characterized by a system economic indicators, primarily the turnover of working capital.
Under the turnover of working capital is understood the duration of one complete circulation of funds from the moment of the transformation of working capital in cash into inventories and until the release of finished products and its sale. The circulation of funds ends with the transfer of proceeds to the account of the enterprise.
The turnover rate of working capital is calculated using three interrelated indicators:
- turnover ratio (the number of turnovers made by working capital for a certain period (year, half year, quarter));
- the duration of one revolution in days,
- the amount of working capital per unit of products sold.
The calculation of the turnover of working capital can be carried out both according to the plan and actually.
The planned turnover can be calculated only for the normalized turnover of funds, the actual one - for all working capital, including non-standardized ones. Comparison of planned and actual turnover reflects the acceleration or deceleration of the turnover of normalized working capital. With the acceleration of turnover, working capital is released from circulation, with a slowdown, there is a need for additional involvement of funds in circulation.
The turnover ratio is defined as the ratio of the amount of proceeds from the sale of products, works, services to the average balance of working capital according to the formula (Fig. 7.29):
K about \u003d P / C,
where P is the net proceeds from the sale of products, works, services, rubles; C - average balances of working capital, in rubles.
Rice. 7.29. Methodology for calculating the turnover ratio
The turnover of working capital can also be presented in days, that is, reflect the duration of one turnover (Fig. 7.30).
The duration of one revolution in days is determined by the formula:
O \u003d C: R / D or O \u003d D / K about,
where O is the duration of one revolution in days; C - balances of working capital (average annual or at the end of the upcoming (reporting) period), rubles; P - revenue of marketable products (at cost or in prices), rubles; D - the number of days in the reporting period.
Rice. 7.30. Calculation of the duration of one turnover in days
To determine the duration of one turnover of receivables, you can use the indicator of sales in selling prices. First, the volume of sales for one day is calculated, and then the urgency of the receivables.
The calculation is made according to the formula:
OD = DZ: Oh,
where OD is the duration of the turnover of receivables (in days); DZ - accounts receivable at the end of the year; O is the volume of sales per day.
The period required for the conversion of all working capital into cash is the sum of the duration of one turnover of inventory in days and the urgency (duration) of one turnover of receivables.
The working capital utilization factor is the reciprocal of the turnover ratio (Fig. 7.31). It characterizes the amount of working capital per unit (1 ruble, 1 thousand rubles, 1 million rubles) of sold products. At its core, this indicator represents the capital intensity of working capital and is calculated as the ratio of the average balance of working capital to the volume of product sales for the analyzed period. Calculated according to the formula:
K z \u003d C / P,
where K z - working capital utilization factor; C - average balance of working capital, rub.; P - proceeds (net) from the sale of products, works, services, rub.
Rice. 7.31. Load Factor Calculation
Example: Behind last year the volume of marketable products at cost amounted to 350,000 thousand rubles. The average balance of working capital for the same period is 47,800 thousand rubles. Determine the performance indicators for the use of working capital by the enterprise.
The calculation is carried out in the following sequence:
1. The turnover ratio is determined: 350,000 / 47,800 = 7.3 turns. That. for the year, working capital made 7.3 rounds. In addition, this indicator means that for every ruble of working capital, 7.3 rubles of sold products accounted for.
2. The duration of one revolution is calculated: 360 / 7.3 = 49.3 days
3. The load factor is determined: 47,800 / 350,000 = 0.14.
In addition to these indicators, the indicator of return on working capital can also be used, which is determined by the ratio of profit from the sale of the company's products to the average balances of working capital (Fig. 7.32).
Rice. 7.32. Return on current assets
Turnover can be defined as general and as private.
General turnover characterizes the intensity of the use of working capital in general for all phases of the cycle, without reflecting the features of the circulation of individual elements or groups of working capital.
Private turnover reflects the degree of use of working capital in each phase of the cycle, in each specific phase of the cycle, in each group, as well as for individual elements of working capital.
To determine the impact of structural changes, the balances of individual elements of working capital are compared with the volume of marketable products (T), which was taken when calculating the total turnover of working capital. In this case, the sum of the indicators of private turnover of individual elements of working capital will be equal to the indicator of the turnover of all working capital of the enterprise, that is, the total turnover.
The quantitative result of the efficiency of the use of working capital is their release from circulation (with an acceleration of turnover) or additional involvement in economic turnover (with a slowdown in the turnover of working capital) (Fig. 7.33).
Rice. 7.33. Consequences of acceleration and deceleration of working capital turnover
Release can be absolute or relative.
Absolute release of working capital takes place when the actual balance of working capital is less than the standard or the balance of working capital for the previous (base) period while maintaining or increasing the volume of sales for this period.
The relative release of working capital takes place in cases where the acceleration of the turnover of working capital occurs simultaneously with the growth in production at the enterprise, as a result, the growth rate of sales outstrips the increase in working capital.
The funds released at the same time cannot be withdrawn from circulation, as they are in inventories of goods and materials, which ensure the growth of production.
The relative release of working capital, like the absolute one, has a single economic basis and meaning, either means to economic entity additional cost savings and allows for an increase in the scale of entrepreneurial activity without attracting additional financial resources.
Example: It is known that for the previous year, the proceeds from the sale of products (in pg) amounted to 6,000 million rubles, for the current year (in tenge) - 7,000 million rubles. The average balance of working capital in the previous year (OS pg) - 600 million rubles, in the current year (OS tg) - 500 million rubles. The number of days in period D is 360 days. Determine the magnitude of the absolute and relative release of working capital from economic turnover.
The calculation is made in the following sequence:
1. The turnover ratios are calculated:
Previous year (KO pg) = 6,000 / 600 = 10 revolutions
Current year (KO tg) = 7,000 / 500 = 14 turns
2. The duration of one revolution in days is determined:
In the previous year (D pg) = 360 / 10 = 36 days
In the current year (D tg) = 360 / 14 = 25.71 days
3. Load factors are determined:
Previous year (KZ pg) = 600 / 6000 = 0.1
Current year (KZ tg) = 500 / 7000 = 0.07142
4. Two methods can be used to calculate the release of working capital.
Method 1: The total amount of release of funds from the economic turnover is calculated according to the formula V = (D tg - D pg) × V tg / D; absolute release: V ab = OS pg - OS tg; relative release: B rel = B - B ab.
According to the task:
B \u003d (25.71 - 36) × 7000 / 360 \u003d (-200) million rubles.
Vab = 500 - 600 = (-100) million rubles
Votn \u003d (-200) - (-100) \u003d (- 100) million rubles.
Method 2: The total amount of release from economic circulation is calculated by the formula B = (KZ tg - KZ pg) × V tg; absolute release: V ab \u003d OS pg - (V tg / KO pg); relative release: V rel = (V tg -V pg) / KO tg.
According to the task:
B \u003d (0.07142-0.1) × 7000 \u003d (-200) million rubles.
Vab \u003d 600 - (7000 / 10) \u003d (-100) million rubles.
Votn \u003d (6000 - 7000) / 10 \u003d (-100) million rubles.
The efficiency of the use of working capital depends on many factors, which can be divided into external factors that influence regardless of the interests of the enterprise, and internal factors that the enterprise can and should actively influence.
External factors include: 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 scope in which the company can manipulate the internal factors of working capital.
Significant reserves for increasing the efficiency of the use of working capital lie directly in the enterprise itself. In manufacturing, 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, production reserves represent that part of the means of production that is temporarily not involved in manufacturing process.
Rational organization of inventories is an indispensable condition for increasing the efficiency of the use of working capital. The main ways to reduce inventories are reduced to their rational use, the elimination of excess stocks of materials, the improvement of rationing, the improvement of the organization of supply, including by establishing clear contractual terms of supply and ensuring their implementation, optimal choice suppliers, streamlined transport. Important role belongs to the improvement of the organization of warehouse management.
Accelerating the turnover of working capital allows you to release significant amounts and thus increase the volume of production without additional financial resources, and use the released funds in accordance with the needs of the enterprise.
Concept, economic essence and composition
working capital
The functional role of working capital in the production process is fundamentally different from the role of fixed assets. Working capital ensures the continuity of the production process. characteristic feature their is the turnover rate.
The material elements of working capital (circulating production assets) are fully consumed in each production cycle, may lose their natural-material form and are fully included in the cost of manufactured products (work performed, services rendered).
Acceleration or deceleration of the movement of value, most of which is working capital, directly affects the financial performance of enterprises.
Current assets (working capital, current assets ) - this is a set of funds advanced to create working capital and circulation funds, ensuring a continuous circulation of funds and returning to its original form after the completion of each turnover.
Rice. 1.1.1 - Classification of current assets
Productive reserves - these are objects of labor prepared for launching into the production process. They consist of raw materials, basic and auxiliary materials, fuel, fuel, purchased semi-finished products, containers and packaging materials, spare parts for the current repair of fixed assets, as well as seeds, fertilizers, pesticides, feed, small inventory, etc.
They also include young animals and fattening animals, although by their economic nature these means of production are not production reserves and are already in the production stage. The size of inventories is determined by the volume of production, norms and nature of their consumption.
Work in progress and semi-finished products of own production - these are objects of labor that have entered the production process; this is a working capital that is at the production stage: raw materials, materials that are in the process of processing, 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. They include: in agriculture - the costs for the harvest of future years (preparation of the soil, sowing winter crops); in animal husbandry - the cost of unfinished egg incubation, stocking ponds, the cost of a transitional supply of honey in the hives; V industrial production- semi-finished products of own production.
Future expenses - these are intangible elements of working capital, including costs that are incurred in a given period (quarter, year), but are included in the cost of products of the future period (for example, the costs of designing and processing technology for new types of products).
Deferred expenses include costs for the construction and maintenance of summer camps, pens, sheds and other non-capital structures for animals. These costs are included in the cost of production in equal shares over 2-3 years.
According to the degree of participation in the production process, the production working capital of an agricultural enterprise can be divided into objects of labor:
not entered into the production process and are in production stocks (seeds, planting material, feed, fertilizers, pesticides, fuel and lubricants, spare parts, etc.);
in the process of production in the form of manufactured but not yet finished products (animals for growing and fattening, work in progress).
According to the degree of influence on the result of production, they are also divided into two groups. The first includes production working capital, directly contributing to the increase and increase economic efficiency production: seeds, fertilizers, feed, animals for growing and fattening, etc. The second group includes objects of labor that ensure the functioning of production fixed assets and keep them in working condition: fuel and lubricants, spare parts.
Working capital at each enterprise is designed to ensure the continuity of production. Their required number is established on the basis of technological standards. For example, the need for fuel and lubricants is determined based on the number of tractors, combines, cars and the amount of proposed work. The need for feed is calculated on the basis of the feeding norms of animals with the corresponding productivity. Necessary condition effective management agricultural production is the correct formation of the size of working capital and their rational use,
IN agriculture due to the discrepancy between the period of production and the working period and the seasonal nature of production, the formation in certain periods of significantly larger stocks of working capital (fodder, seeds, fertilizers, fuels and lubricants) is required. The specialization and intensification of agricultural production has a significant impact on the size of working capital. With in-depth specialization in the production of livestock products, more feed is required, and in the production of grain crops - seeds, mineral fertilizers, fuels and lubricants.
Economic entity working capital lies in the fact that they completely transfer their value to newly created agricultural products. The cost of working capital is included in total costs for the production of products. Circulating assets participate in the production process during one production cycle and, therefore, require constant compensation at the same level with simple reproduction or in an increased amount with expanded reproduction. Revolving assets in the process of production change their material form, which distinguishes them from fixed production assets. So, the seed material in the production process turns under the influence of natural, biological and soil factors into plants, and mineral fertilizers introduced into the soil, are converted into various nutrients that create conditions for the formation of plants,
The circulation funds include funds that serve the process of selling products: finished products in the warehouse, goods shipped to customers, but not yet paid for by them, funds in settlements, cash in the cash desk of the enterprise and in bank accounts.
Thus, working capital is the funds of an enterprise intended for the formation of working capital and circulation funds.
Working capital of agriculture is in a state of continuous movement, carrying out the circulation for certain time, passing through three main stages in succession.
1) procurement (purchases);
2) production;
3) marketing.
Any business starts with a certain amount of money (circulation funds), which are invested in a certain amount of resources for production (or goods for sale). As a result, at the stage of purchases, circulation funds are transferred from the monetary form to the production form (objects of labor or goods).
At the stage of production, resources are embodied in products, works or services. The result of this stage is the transfer of working capital from production form into commodity (circulating production assets into circulation funds).
At the implementation stage, working capital from commodity form reverts back to cash. The size of the initial amount of money (D) and proceeds (D ") from the sale of products (works, services) do not match in size. Received financial results business (profit or loss) explains the reasons for the discrepancy. Elements of working capital are part of a continuous flow of business transactions.
Purchases lead to an increase in inventories and accounts payable; production leads to an increase in finished products; sale - to an increase in receivables and cash on hand and on the current account. This cycle of operations is repeated many times and eventually comes down to cash receipts and cash payments.
The period of time during which the turnover of funds is made is the duration of the production and commercial cycle. This period consists of the length of time between the payment of money for raw materials and materials and the receipt of money from the sale of finished products. The duration of the cycle is affected by the duration of the periods:
Lending to the organization by suppliers;
lending by the enterprise to buyers;
Finding raw materials and materials in stocks;
production and storage of finished products in a warehouse.
Elements of working capital continuously move from the sphere of production to the sphere of circulation and again return to production.
The duration of the stay of working capital in the sphere of production is determined by the time of production, and the duration of their stay in the sphere of circulation represents the time of circulation. The time of production and the time of circulation add up to the time of circulation.
Part of the working capital is constantly in the sphere of production (inventory, work in progress, finished products in stock, etc.), and the other part is in the sphere of circulation (shipped products, receivables, securities, cash, etc. ). Therefore, the composition and size of the working capital of the organization are determined not only by the needs of production, but also by the needs of circulation. The need for working capital for the sphere of production and for the sphere of circulation is not the same when different types economic activity, and even for different organizations of the same industry.
This need is determined by the material content and turnover rate of working capital, production volume, technology and organization of production, the procedure for selling products and purchasing raw materials and materials, and other factors.
To calculate the financial and operational needs (FEP) in working capital, the following methods are used: analytical, direct account, coefficient.
The analytical (experimental-statistical) method lies in the fact that FEPs are calculated over a number of years (3-5) and averaged.
Calculations are based on the ratio:
FEP= Z + D b - K p, (1.1.1)
where Z - reserves and other current assets from section II of the asset balance;
Db - accounts receivable;
Кп - short-term liabilities (results of Section V of the balance sheet).
The direct account method is that, using the standards, the need for each element of working capital is calculated:
* productive reserves;
* expected work in progress;
* expected balances of finished products in stock;
* expected accounts receivable;
* Necessary cash and securities.
The coefficient method consists in the fact that at first the calculations are carried out using the direct calculation method, and then they are adjusted in accordance with the expected dynamics of growth in production volumes.
In the practice of planning, accounting and analysis, working capital is grouped according to (see Fig. 1.1.1):
* functional role in the production process - on working capital and circulation funds;
* material and material content - for inventories, unfinished products, finished products and goods, cash, settlements and other assets;
* the practice of control, planning and management - on normalized and non-standardized;
* sources of formation - on their own, borrowed, attracted;
* liquidity (rate of conversion into cash) - for absolutely liquid funds, quickly realizable, slowly realizable working capital (Table 1.1.1);
* the degree of risk of investing funds - on working capital with a minimum, small, medium and high risk of investments (Table 1.1.2);
* standards of accounting and reflection in the balance sheet of the organization - for working capital in stocks and costs, settlements, cash and other assets.
To assess the composition and structure of working capital, it is necessary to analyze changes in each item of current assets of the balance sheet (see Table 1.1.2).
Table 1.1.1
Table 1.1.2
Depending on the characteristics of the formation, working capital is divided into: standardized and non-standardized.
Normalized working capital includes, as a rule, all working capital, as well as that part of circulation funds that is in the form of balances of unsold finished products in the warehouse of the organization. Normalized working capital is reflected in financial plans organizations.
Non-standardized working capital includes all other elements of circulation funds, i.e. products sent to consumers, but not yet paid for, and all types of cash and settlements.
The division of working capital into own and borrowed indicates the sources of origin and forms of provision of working capital to the enterprise for permanent or temporary use.
In connection with the seasonality of production in agriculture, there is a large unevenness in the costs of working capital and significant change their structures in different periods of the year. So, in winter, a significant amount of working capital is in stocks of seeds and feed, and in summer a large share of them is invested in stocks of petroleum products, spare parts for machines, and in work in progress.
In the process of production, a certain part of agricultural products is not sold, but in kind in the form of seeds, feed, milk for feeding calves, etc., is again supplied for on-farm turnover.
Working capital of agriculture can be conditionally divided into two parts. The first of these includes items and materials that have not yet entered the production process and are in production stocks (stocks of seeds and planting materials, feed, fertilizers, pesticides, fuels and lubricants, spare parts, etc.). The second group is represented by objects and materials already in the process of production in the form of manufactured products (young animals, fattening animals, work in progress).
1.2 Sources of formation of working capital
The formation of working capital in agriculture has some features. Due to the long production cycle, enterprises have to maintain significant inventories for several months. The seasonality of agricultural production causes sharp fluctuations in the availability of working capital by quarter. A significant part of the inventories here is formed by own production(seeds, feed, animals for growing and fattening, etc.).
Table1.2.1
Sources of formation of working capital can be own, borrowed and attracted. To replenish own working capital, along with profit, the so-called stable liabilities are used. These include normal (carrying over from month to month) arrears of wages and social insurance contributions, the balance of the reserve fund, etc. At agricultural enterprises, own funds are created at the expense of a part of the finished product (seeds, feed, etc.). During the year, the need for working capital changes, so it is advisable to partially form them through borrowing, that is, short-term bank loans. Funds raised are accounts payable of all types, as well as funds for targeted financing before they are used for intended purpose. Initially, when an enterprise is created, working capital is formed as part of its authorized capital (capital). They are directed to the purchase of inventories entering production for the manufacture of marketable products. Finished products are delivered to the warehouse and shipped to the consumer. Until the moment of its payment, the manufacturer feels the need for funds. The value of this need depends not only on the amount of invested funds, but also on the size of the forthcoming calculations, it can fluctuate throughout the year according to different principles. Therefore, the company uses other sources of working capital - stable liabilities, accounts payable, bank loans and other loans.
As the production program grows, the need for working capital increases, which also requires appropriate funding for the increase in working capital. In this case, the source of their replenishment is the net profit of the enterprise.
Since the main part of the enterprise's funds is on the current account, it is necessary to allocate that part of them that, without prejudice to the economic activity of the enterprise, can be used as working capital. The rest of the funds may have a different purpose and be used to finance capital investments or form financial assets.
As working capital, the company uses stable liabilities. They are equated to their own sources, as they are constantly in the turnover of the enterprise, are used to finance its economic activities, but do not belong to it. Sustainable liabilities include:
The minimum carry-over debt on wages and social security contributions, in Pension Fund, health insurance, employment fund;
Minimum debt on reserves to cover future expenses and payments;
Debts to suppliers for uninvoiced deliveries and accepted settlement documents, the payment deadline for which has not come;
Debts to customers for advance payments and partial payment for products;
Debt to the budget for certain types of taxes.
When calculating the minimum wage arrears, the period in days between the date of accrual and the date of payment is determined wages. Then the one-day amount of wage arrears is calculated and multiplied by the minimum number of days during which it is in the company's turnover.
The amount of debt to suppliers for uninvoiced deliveries and settlement documents, the payment deadline for which has not come, can be determined as follows: according to analytical accounting for the previous reporting period, the average amount for this item is calculated, which is multiplied by the growth rate of production volume for the main activity in the upcoming period. If there are real prerequisites for reducing the amount of debt, the acceleration of the turnover of working capital is taken into account.
The minimum debt to the budget is determined by those types of tax payments, the accrual period of which occurs earlier than the payment period. This applies to taxes paid by the enterprise as an economic entity (tax on the property of the enterprise, land tax, tax on road users), as well as to income tax on the wages of workers and employees of this enterprise, which it transfers to the budget.
In addition to own and equivalent funds, the source of the formation of working capital may be the accounts payable of the enterprise (funds that do not belong to the enterprise, but are temporarily in its circulation). If sustainable liabilities can be planned, then accounts payable are not a planned source of working capital formation.
Accounts payable are divided into normal, arising in connection with the peculiarities of the settlements, and abnormal, resulting from the violation by buyers of the terms of payment of settlement documents. In the latter case, the buyer, having received inventory items from the supplier and not paying for them on time, uses funds that no longer belong to him in his turnover. Meanwhile, with the current inflation, the speed of making payments between enterprises plays an important role. The delay in payments leads to a slowdown in the turnover of working capital and contributes to the deterioration of the financial condition of the supplier.
Currently, the insolvency of enterprises has reached alarming proportions and tends to grow. The applied methods of solving this problem (mutual offset of non-payments, prepayment, bills) do not yet give the desired effect. This is especially detrimental to enterprises with a long production cycle.
Among other sources of formation of working capital, one can name temporarily unused balances of special-purpose funds formed at the expense of profit.
The company's need for working capital does not remain constant throughout the year. It may vary depending on various factors:
seasonality of production;
uneven supply of inventory items;
untimely receipt of money for shipped products, accumulation of unsold finished products in the warehouse, etc.
Some of the listed factors are determined by the specifics of production (seasonality of production), the method of shipment of products (for example, only during the navigation period), i.e. reasons related to the normal conditions of production and sale of products on specific enterprise. Therefore, it is not economically feasible to form working capital only from its own sources, as this reduces the ability of the enterprise to finance other costs. As borrowed sources, short-term loans from the bank, other creditors, and commercial loans are used.
The bank issues short-term loans by entering into a loan agreement with the company. Loans are linked to financial condition enterprise, its solvency. Before issuing a loan, the bank carries out certain analytical work, taking into account the size and term of the requested loan, the results of the company's economic activity, and the available loan security. Currently, commercial banks lend to enterprises secured by property or subject to insurance against the risk of default on the loan. A short-term loan is issued for a period of up to one year, but due to strong inflationary processes, the actual terms for granting a loan are much shorter.
Other creditors provide funds to the enterprise on loan at an agreed interest for a period of less than a year with the execution of a bill or other debt obligation. A commercial loan is also issued by a promissory note. This is a supplier's loan to the buyer, when the payment for inventory items is made by the buyer later on the dates agreed with the supplier. The interest for using a bank and commercial loan is included by the borrower in the cost of production within the discount rate Central Bank increased by three points. The rest of it is paid from the profit remaining at the disposal of the enterprise. Also, interest is paid from the profit on overdue loans of the bank and suppliers. Interest on loans from other creditors is paid only from the net profit of the enterprise.
The competence of the bank is to resolve the issue of issuing working capital. The company pays interest on such loans from its net profit. In the context of the development of inflationary processes and high interest rates for the use of short-term loans, the importance of own sources for the formation of working capital is increasing. Currently, the company uses short-term bank loans in the event that the credited operation generates income that exceeds the cost of paying interest on the loan. The provision of funds in loans by other lenders and commercial credit have not yet received significant distribution.
1.3 Rationing of working capital
The turnover of working capital is an important indicator of the effectiveness of their use. The criterion for evaluating the effectiveness of working capital management is the time factor: the longer working capital stays in the same form (cash or commodity), the lower the efficiency of their use, ceteris paribus, and vice versa. The turnover of working capital characterizes the intensity of their use.
The role of the turnover indicator is especially great for the sectors of the sphere of circulation: trade, Catering, household services, mediation, banking business and others.
Efficient use of working capital industrial enterprises characterized by three main indicators.
1. Turnover ratio , which is determined by dividing the volume of sales of products in wholesale prices by the average balance of working capital at the enterprise:
Ko \u003d Rp / CO,
whereKo, - turnover ratio of working capital, turnover;
Rp - volume of sold products, rub.;
SO - the average balance of working capital, rub.;
The turnover ratio characterizes the number of circuits made by the working capital of the enterprise for a certain period (year, quarter), or shows the volume of sales per 1 rub. working capital. It can be seen from the formula that an increase in the number of revolutions leads either to an increase in output by 1 rub. working capital, or to the fact that for the same volume of production it is required to spend a smaller amount of working capital.
2. Working capital utilization factor, the value of which is the inverse of the turnover ratio. It characterizes the amount of working capital spent on 1 rub. products sold:
Kz \u003d CO / Rp,
where Kz, - working capital utilization factor.
3. The duration of one turnover in days, which is found by dividing the number of days in the period by the turnover ratio Ko.
where D is the number of days in the period (360, 90).
The shorter the duration of the turnover of working capital or the greater the number of circuits they make with the same volume of products sold, the less working capital is required, and, conversely, the faster working capital makes a circuit, the more efficiently they are used.
4. Material consumption - an indicator of the consumption of material resources for the production of any product. It is expressed in physical terms (units) of the consumption of raw materials, materials, fuel, energy necessary for the manufacture of a unit of output.
5. Saving working capital. Distinguish between absolute and relative savings in working capital. The absolute savings of working capital is determined by a simple arithmetic difference between the actual and planned (program, forecast, comparable) cost. The relative savings (or release) of working capital is calculated by the formula:
where: - relative savings of OS, thousand rubles.
Planned (program, forecast, comparable) cost of implementation, thousand rubles.
Basic turnover ratio
The actual cost of working capital at their actual turnover.
For example: in the previous (base) year, the turnover ratio was 3.0 with a sales volume of 3,600 thousand rubles. and 1200 thousand rubles. working capital used. In the current year, with a sales volume of 4800 thousand rubles. and used working capital in the amount of 1000 thousand rubles. the absolute effect (release) of working capital will be 200 thousand rubles. (1200-1000), and the relative effect is 400 thousand rubles. (1200-4800/3).
4. Ways to accelerate the turnover of working capital .
Accelerating the turnover of working capital is a priority for enterprises in modern conditions and is achieved in the following ways:
At the stage of creating inventories - the introduction of economically justified norms of the reserve; approaching suppliers of raw materials, semi-finished products, components, etc. to consumers; widespread use of direct long-term connections; expansion of the warehouse logistics system, as well as wholesale trade in materials and equipment; complex mechanization and automation of loading and unloading operations in warehouses,
At the stage of work in progress - acceleration of scientific and technological progress (introduction of advanced equipment and technology, especially waste-free and low-waste, robotic complexes, rotary lines, chemicalization of production); development of standardization, unification, typification; improvement of the forms of organization of industrial production, the use of cheaper structural materials; improvement of the system of economic incentives; economical use of raw materials and fuel and energy resources; increase in the share of products in high demand.
At the stage of circulation - the approach of consumers of products to its manufacturers; improvement of the settlement system; increase in the volume of sold products due to the fulfillment of orders through direct communications, early release of products, production of products from saved materials; careful and timely selection of shipped products by batches, assortment, transit norm, shipment in strict accordance with the concluded contracts.
Ways to save working capital and accelerate working capital, that is, to increase the efficiency of their use, will be concrete in individual industries. In the industry as a whole, these include the following.
1. Reducing the norms of expenses and every possible saving of production resources. Reserves of this kind processing industry Russia are great: unit costs many resources in the country is 1.5-2 times higher than similar indicators of countries with developed market economies.
2. Decrease in inventory balances in warehouses in all industry structures. And here the reserves are enormous. In Japan, for example, stocks at the input and output do not exceed five percent of the resources used and goods produced, while in Russia they are several times higher and lie in "dead capital", burdening the already small cash circulating assets.
It is necessary to learn how to work “from the wheels”, having minimum stocks in accordance with the above calculations according to the norms and standards of working capital.
3. Reducing the duration of the production cycle through the introduction of advanced technologies, improvement of existing ones, transition to continuous production processes, and intensification of production.
4. Rationalization of relations with suppliers and consumers, taking into account stringent requirements market economy, which will minimize inventories and the rest of the products in warehouses.
5. Compliance with timely mutual settlements between market entities for payments. Liquidation of non-payments. Working capital literally settles in these non-payments, which significantly slows down the turnover of working capital.
6. Rationalization of location of enterprises and capacities of industries. This will speed up the delivery of resources and the sale of goods, thereby increasing the efficiency of the use of working capital, increasing the speed of turnover.
7. Improving the organization of production. Transition to continuous flow production. Optimization of the level of concentration, specialization, cooperation and combination of production.
Questions for self-control:
1. What is working capital?
2. Give the composition of working capital.
3. What are the elements of circulating production assets?
4. What are the elements of circulation funds?
5. What is the working capital structure?
6. List the sources of formation of working capital.
7. What is the rationing of working capital?
8. What is the norm and standard of working capital?
9. How is the duration of one turnover of working capital determined?
10. How to determine the turnover ratio of working capital?
11. What is the duration of one turnover of working capital?
12. How is the working capital utilization factor determined?
13. What is material consumption?
14. How is working capital savings determined?
15. List ways to improve the efficiency of the use of working capital.
