Year of writing:1924 Reading time:Description of the work:The novel The White Guard, ...
Working capital management of organizations
The essence and classification of working capital of the enterprise.
Current assets of the enterprise:
This is his fund of money, designed to ensure a planned, continuous and expanded process of production and advanced on the one hand, in circulating production assets and circulation funds , and on the other hand, in intangible and tangible current assets ;
- set Money organizations advanced to create circulating production assets and circulation funds that ensure a continuous circulation of funds.
The part of production assets that is completely consumed in each production cycle and transfers all its value to newly created products.
OS of the enterprise, participating in the process of production and sale of products, make a continuous circuit. At the same time, they move from the sphere of circulation to the sphere of production and vice versa.
Working capital in its movement goes through three stages:
1. monetary
2. production
3. commodity
1. D-T - fixed assets, which originally have the form of cash, are converted into inventories, i.e. move from the sphere of circulation to the sphere of production. At this stage, objects of labor (production stocks) and labor power are acquired.
2. T ... P ... T1 - OS are directly involved in the production process and take the form of work in progress, semi-finished products, finished products.
3. T1-D1 - takes place again in the sphere of circulation. As a result of the implementation finished products OS again take the form of cash.
4. The difference between the cash proceeds and the funds originally spent (D-D1) determines the amount of cash income of enterprises.
Thus, making a complete circuit (D-T ... P ... T1-D1), OS operate at all stages simultaneously, which ensures the continuity of the production and circulation process.
The working capital of an enterprise in the sphere of production is called revolving production assets, and in the sphere of circulation - circulation funds.
Classification of current assets
1. By area of turnover:
· circulating production assets- objects of labor (raw materials, materials, semi-finished products, etc.) and means of labor with a service life of not more than 1 year and a cost of not more than 100 times the MMW, which participate in only one production cycle, lose their original shape and completely transfer their cost to the cost of new finished products;
· circulation funds- funds of the enterprise invested in stocks of finished products, goods shipped but not paid for, as well as funds in settlements and cash on hand and on accounts. The sale of finished products requires a certain time, during which the previously spent funds are in the stage of settlements between the contractor and the customer.
2. By elements:
· productive reserves- objects of labor prepared for launching into the production process: raw materials, basic and auxiliary materials, fuel, fuel, purchased semi-finished products and components, packaging and packaging materials, spare parts for current repairs of fixed assets, etc.;
· work in progress and semi-finished products of own production- objects of labor that entered the production process: materials, parts, assemblies and products that are in the process of assembly or 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;
· Future expenses - intangible elements of working capital, including the costs of preparing and developing new products that are produced in a given period (quarter, year), but are attributed to products of the future period (costs for the design and development of technology for new types of products, etc.);
· finished products - products intended for sale are the result of the production consumption of working capital;
· funds in settlements - the amount of money due to the enterprise on the presented invoices for products;
· cash - free cash on settlement and other accounts and in the cash desk of the enterprise.
3. By scope of normalization:
normalized working capital - working capital in stocks of inventory items;
non-standardized working capital - accounts receivable, funds in settlements.
4. By sources of funding:
own;
borrowed.
The ratio between the individual elements of working capital in value terms or their components is called working capital structure , measured as a percentage. It depends on the degree of mechanization, the adopted technology, the organization of production, the duration of the production cycle and other factors.
1. COMPOSITION AND STRUCTURE
working capital- is a set of circulating production assets and circulation funds in monetary terms. These components of working capital serve the process of reproduction in different ways: the former in the sphere of production, and the latter in the sphere of circulation.
The conditions for the production and sale of products require that the warehouses of the manufacturing enterprise constantly have stocks of material assets consumed in the production process, as well as finished products. In addition, to ensure uninterrupted operation, it is necessary that the workshops have certain backlogs of unfinished products. And finally, the enterprise must have certain cash on hand, in bank accounts, in settlements.
The assets of an enterprise, which, as a result of its economic activity, completely transfer their value to the finished product, take part in the production process once, changing or losing their natural-material form, are called working capital.
Working capital is the most mobile part of the assets. In each circuit, working capital goes through three stages: cash, production and commodity.
At the first stage the funds of enterprises are used to purchase raw materials, materials, fuel, containers, purchased semi-finished products, components, etc., necessary for the implementation of production activities. At the second stage inventories are converted into work in progress and finished goods. At the third stage there is a process of selling products and receiving funds. According to the composition and nature of the site in the production process, working capital is divided into two components: working capital and circulation funds.
Revolving production assets serve the sphere of production. They constitute the material basis of production and are necessary to ensure the production process, the formation of value. The second part of working capital includes circulation funds, consisting of finished products and cash assets of the enterprise. Circulation funds do not participate in the formation of value, but are carriers of already created value. Their main purpose is to provide monetary means for the rhythm of the circulation process.
The unification of circulating funds and circulation funds into a single system of circulating assets follows from the continuity of the advanced value along the three named stages of their circulation.
Consider the individual elements of circulating production assets. The vast majority of circulating production assets are inventories. Productive reserves- these are stocks of raw materials and materials, semi-finished products and components, fuel, containers, household equipment, spare parts for repairs, tools.
Raw materials and basic materials- these are the objects of labor that make up the material (material) basis of the manufactured product. Raw materials are agricultural products (grain, wool, cotton, fruits, vegetables) and mining industry (oil, ore, gas, etc.). The main materials are considered products of the manufacturing industry (flour, sugar, fabric, metal, leather, etc.).
Semi-finished products- these are objects of labor, the manufacture of which is completely completed in one workshop, but which are subject to further processing in other workshops of the same enterprise or can be sold.
Auxiliary materials, unlike raw materials and purchased semi-finished products, do not form the main content of the manufactured product, but only contribute to the implementation of the technological process and the formation of the product.
Along with inventories, working capital includes funds in production, including unfinished products and deferred expenses. Work in progress (WIP)- these are objects of labor that have entered the production process, but have not passed all the processing operations provided for by the technological process.
The only intangible element of circulating production assets is deferred expenses necessary for creating backlogs, installing new equipment, etc. Deferred expenses include costs for the preparation and development of new types of products, new technology, produced in the current period, but payable in the future.
The ratio of the individual components of working capital in their total value characterizes the structure of working capital. This is the ratio between the individual elements of working capital (raw materials, basic materials, fuel, packaging, spare parts, finished products, etc.), expressed as a percentage of the total.
According to the sources of formation and replenishment, working capital is divided into own and equivalent funds and borrowed funds.
Own are called working capital, which are allocated by the participants (founders) for the smooth functioning of their enterprise. The main sources of formation of own working capital are profit, on-farm financial resources and their redistribution.
Equated to own working capital are funds that do not belong to the enterprise, but according to the terms of the calculations are constantly in its circulation. These are the so-called stable liabilities. These include the minimum debt wages, payroll, provision for future payments, accounts payable and other stable liabilities.
Sustainable payroll liabilities UPzp is calculated by the formula:
UPzp \u003d ZPkv × Pd / 90,
where ZPkv is the payroll fund of the fourth quarter of the planned year, taken as the basis for calculating the standard of own working capital, rubles;
Pd - the gap between the accrual and payment of wages, days.
The amount of the minimum wage arrears Zzp is determined by the following formula:
Zzp \u003d Zpl × Pd / 90,
where ZPpl is the planned payroll fund for the corresponding quarter, rub.;
Pd - the number of days from the beginning of the month to the day of the issuance of wages.
Borrowed funds are working capital received from financial institutions in the prescribed manner in the form of loans and credits.
2. RATE OF WORKING ASSETS
Rationing of working capital is the basis for the rational use of economic assets of an enterprise. It consists in the development of reasonable norms and standards for their consumption, necessary to create a constant minimum stock for the smooth operation of the enterprise.
According to the degree of planning, working capital is divided into standardized and non-standardized.
To normalized include working capital in inventories.
To non-standardized working capital includes: cash, shipped goods and delivered works, all types of receivables, etc.
In practice, three main methods of normalizing working capital are used: analytical, coefficient and direct counting method.
The analytical method uses actual data on the amount of working capital for a certain period. At the same time, surplus and unnecessary stocks are specified, amendments are made for changes in the conditions of production and supply. The specified result of these calculations is considered the standard of working capital for the planned period. This method is used in cases where significant changes in the operating conditions of the enterprise are not expected and the funds invested in material assets and stocks have a large specific gravity.
The coefficient method consists in the fact that the standards for the planning period are calculated by amending (using coefficients) the standards of the previous period. The coefficients take into account changes in production volumes, turnover of working capital, assortment shifts and other factors.
The direct account method consists in the fact that the amounts of working capital are calculated for each specific type of inventory, then they are added up, and as a result, the standard is determined for each element of normalized working capital. The general standard is the sum of the standards for all elements. This method is the most accurate, justified, but at the same time quite laborious.
When normalizing working capital, it is necessary to establish stock standards for certain types of normalized materials, determine the standards for each element of working capital and calculate the total standard for normalized working capital.
Working capital norms characterize the minimum stocks of inventory items, calculated in days of stock or as a percentage of a certain base (commodity products, the volume of fixed assets). 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 established for production stocks, work in progress, stocks of finished products in the warehouse of the enterprise.
Consider the calculation of the norms of inventories, work in progress and finished products.
Norm in days for production stocks(raw materials, materials, purchased semi-finished products) consists of time:
unloading, acceptance, warehouse processing and laboratory analysis (preparatory stock);
the presence of materials in the warehouse for the current production process (current stock) and insurance, or guarantee, stock (insurance stock);
preparation of materials for production (technological reserve);
stay of materials in transit (transport stock).
The largest share in the total norm of working capital for a group of materials is the norm of the current stock.
current stock- a constant supply of materials, fully prepared for launch into production and designed for the smooth operation of the enterprise. Its value depends on the average daily consumption of materials, the interval between regular deliveries, the size of supply lots and production launch lots. For many materials, the interval between successive deliveries is taken at half the rate or calculated by the arithmetic mean.
Maximum value of the current stock Zmax is determined by the formula:
Zmax \u003d Ap × T,
T is the time between two successive deliveries, days.
In this case, the average daily consumption is established by dividing the total need for this material in the planning period (year, quarter, month) by the number of calendar days for the same period, if the enterprise operates continuously, or by the number of working days, if it does not work on holidays and weekends.
Average current stock(it is often called a transitional stock) Zav is determined by the formula:
Zav = Zmax / 2.
The next most important is the safety stock, which is created in case of possible disruptions in time, delays in transit, receipt of low-quality materials, etc. The size of the safety stock is usually set as a percentage of the norms of working capital for the current stock (from 30 to 50%).
Insurance, or warranty, stock Zs can also be determined by the formula:
Zs \u003d Adn × Pm,
where Adn - the norm of the safety stock of materials, days;
Pm - the average daily requirement for this type of materials, rub.
On average, the transport stock is the same in duration, 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 enterprises also form the so-called technological reserve (Ztech), which is necessary to prepare for production. The value of such a stock is determined by the formula:
Ztech = An × Tc,
where Ap is the average daily requirement for this material, natural units of measurement;
TC is the duration of the technological cycle, days.
General stock rate Ztot for raw materials, basic materials, purchased semi-finished products is determined by the formula:
Ztot = Ztek + Zs + Ztr + Zteh.
The normative need for working capital in spare parts for the current maintenance and repair of equipment is calculated as the product of the stock rate in rubles, established in relation to a certain indicator, by the total planned value of the latter.
For example, the stock rate of spare parts for maintenance and repair of equipment is set in rubles. for 1 thousand rubles. balance sheet value of the equipment.
Typical working capital rate for spare parts Atype is determined by the formula:
Atip \u003d Atot / Sob,
where Atot is the total need for working capital for spare parts, rub.;
Sob - the cost of equipment and Vehicle at the end of the planned year.
Stock rate for work in progress NZP is set on the basis of the duration of the production cycle and the degree of readiness of products, which is expressed through the cost escalation factor. The norm is defined as follows:
Hnz \u003d Tc × Knz,
where TC is the duration of the production cycle, days;
Knsp - the coefficient of increase in costs.
The coefficient of increase in costs in work in progress characterizes the level of product readiness and is due to the fact that costs in work in progress are carried out at different times and increase gradually throughout the entire cycle. The cost escalation factor is always greater than 0 and less than 1.
The stock rate for finished products depends on the time of processing payment documents, packaging and labeling, storage in a warehouse until shipment, picking products up to a transit norm, the duration of transportation of products from the enterprise’s warehouse to the station of departure and loading into vehicles.
After establishing the norms of stocks, the norm of working capital is determined in monetary terms for individual elements of working capital and for the enterprise as a whole.
Working capital ratio- the minimum amount of funds required by the enterprise for the organization of production activities.
Mostly standard for individual elements of working capital Sni is found by the formula:
Sni = H3i × Ai,
where H3i is the stock rate of the i-th element, days;
Ai is the indicator in relation to which the norm is set.
Let's consider the calculation of working capital norms using examples.
Inventory standard(raw materials, materials, purchased semi-finished products, etc.) is determined by multiplying the norm in days by their one-day consumption.
Sni = H3i × M / Tk,
where M is the consumption of raw materials and materials for a calendar period of time, rub.;
Тк — calendar period, days (year — 360 days; quarter — 90 days, month — 30 days).
Work in progress standard Anzp is calculated by multiplying the inventory rate in work in progress by the average daily output of products valued at production cost.
Anzp \u003d Psut × Nzp,
where Psut is the average daily output at the production cost, rub.;
Nnsp - stock rate in work in progress, days.
Working capital ratio for finished products ZGP in the warehouse of the enterprise is determined by the formula:
ZGP \u003d Psut × Nzg,
where Psut - one-day output of finished products at production cost;
Nzg - the norm of the stock of finished products, days.
Calculation of the working capital ratio for deferred expenses Ab.p is determined by the formula:
Ab.p. \u003d Zn + Zpl - Zpog,
where Зн - deferred expenses at the beginning of the planning period;
Zpl - expenses of the planned period for these purposes;
Zpog - costs in the planning period, subject to write-off to the cost of production.
The rationing process ends with the establishment of an aggregate standard of working capital by adding private standards for inventories, work in progress, deferred expenses and finished products.
The average rate of working capital for the enterprise as a whole is calculated by dividing the total rate by the one-day output of marketable products at production cost.
Thus, the rationing of working capital - necessary condition determining the minimum sufficient amount of funds to ensure the effective operation of the enterprise as a whole.
A.S. Palamarchuk, Doctor of Economics sciences, prof. REA them. G.V. Plekhanov
Accounting management accounting. Cribs Zaritsky Alexander Evgenievich
69. Working capital of an enterprise: working capital and circulation funds
Cash invested in working capital and circulation funds are called working capital and represent the working capital of the enterprise. Circulating production assets and circulation funds are divided into various elements that make up the material structure of working capital.
Working capital assets include:
- productive reserves;
– work in progress and semi-finished products of own production;
- Future expenses.
Productive reserves - these are objects of labor prepared for launching into the production process. In their composition, in turn, the following elements can be distinguished: raw materials, basic and auxiliary materials, fuel, fuel, purchased semi-finished products and components, packaging and packaging materials, spare parts for current repairs, low-value and wearing items.
Work-in-progress and semi-finished products of own manufacture are objects of labor that have entered the production process: materials, parts, components and products that are in the process of processing or assembly, as well as semi-finished products of their own manufacture, unfinished completely by production in one workshop and subject to further processing in other workshops the same enterprise.
Future expenses - these are intangible elements of working capital, including the costs of preparing and developing new products that are produced in a given period (quarter, year), but are attributed to products of a future period.
The circulation funds consist of the following elements:
- finished products in warehouses;
- goods in transit (shipped products);
- cash;
- funds in settlements with consumers of products.
The ratio between the individual elements of working capital or their components is called the structure of working capital. The structure of working capital depends on the sectoral affiliation of the enterprise, the nature and characteristics of the organization of production activities, the conditions of supply and marketing, settlements with consumers and suppliers.
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Industrial working capital- this is a part of the means of production, including raw materials, materials, energy resources, which are used in the production process only once, fully embodied in the product being produced.
To funds to appeals include the means servicing the process of selling products: finished products in the warehouse, goods shipped but not paid for by customers, funds in settlements, etc.
Thus, working capital is the cash assets of an enterprise intended for the formation of working capital and circulation funds, which once participate in the production process, fully transfer their value to the finished product and change their natural-material form.
Circulating assets function simultaneously in the sphere of production and in the sphere of circulation, passing through three stages of the circuit: preparatory, productive and the stage of implementation.
Figure 3.9. Stages of circulation of working capital.
Preparatory stage proceeds in the sphere of circulation, where money is converted into the form of production reserves.
On the productive stage production stocks with the participation of tools and labor power are converted into unfinished products, semi-finished products and finished products. Here, the advance of the cost of created products continues, i.e. the process of production consumption of inventories, the transfer of the value of fixed production assets and wages to manufactured products. The production stage ends with the release of finished products.
On the implementation stage
the commodity form of the value of production is converted into the form of money. The advanced funds are recovered at the expense of a part of the received proceeds from the sale of products. The rest of it is cash savings.
The sale of finished products and the receipt of funds complete the circulation of working capital. Part of these funds will be used to finance current production, which allows you to start a new production cycle, creates the possibility of a systematic resumption of the production process, which is carried out through a continuous circulation of enterprise funds.
The beginning of the next production cycle does not have to be preceded by the completion of the previous cycle of funds. In practice, resources are continuously processed and the production process is not interrupted.
The monetary form, which is taken by working capital at the third stage of their circulation at the same time, is also the initial stage of the circulation of funds. Working capital during movement are simultaneously at all stages and in all forms. This ensures a continuous production process and uninterrupted operation of the enterprise.
The period during which the capital advanced in monetary form returns to its owner in the same form is called the turnover time of working capital.
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Knowledge and analysis of the structure of working capital at the enterprise are of great importance, since it to a certain extent characterizes the financial condition at one time or another of the enterprise's operation. For example, an excessive increase in the share of receivables, finished products in stock, work in progress indicates a deterioration in the financial condition of the enterprise. Accounts receivable characterizes the diversion of funds from the turnover of the enterprise and their use by debtors in their turnover. An increase in the share of work in progress, finished products in stock indicates the diversion of working capital from circulation, a decrease in sales, and therefore profits. All this indicates that the enterprise needs to manage working capital in order to optimize their structure and increase their turnover.
To study both the composition and structure, working capital is classified according to the following criteria:
Spheres of turnover
Coverage of normalization,
Liquidity rates
By area of turnover circulating assets are divided into circulating production assets (sphere of production) and circulation funds (circulation sphere). (fig.3.11)
At the production stage, resources function in the form of circulating production assets, including inventories, work in progress, and deferred expenses.
Productive reserves- these are objects of labor and means of labor with a service life of not more than a year, prepared for launching into the production process. These are raw materials, basic and auxiliary materials, purchased semi-finished products and components; fuel; energy, container; tools and other low-value and wearing items. Inventories are designed to ensure the uninterrupted operation of the enterprise between adjacent deliveries.
Work in progress and semi-finished products of own production- these are objects of labor that have entered the production process: materials, parts, assemblies and products (which are in the process of processing or assembly), as well as semi-finished products of their own manufacture, completely finished in the same workshops of the enterprise and subject to. further processing in other shops of the same enterprise in accordance with the accepted production technology.
Future expenses- these are intangible elements of production assets, including costs for the preparation and development of new products in a given period, but are included in the cost of products in the future period (for example, costs for the design and development of technology for new types of products, subscription to periodicals, etc.)
Circulating production assets in their movement are connected with circulation funds.
circulation funds serve the process of circulation of goods. They do not participate in the formation of value, but are its carriers. The circulation funds include:
Finished products in warehouses;
Goods in transit (shipped products);
Funds in settlements with consumers of products (in particular, accounts receivable);
Short-term financial investments (for example, in securities);
Cash in the company's cash desk and bank accounts.
Depending on the practice of control, planning and management current assets are divided into standardized and non-standardized. Rationing is the establishment of economically justified (planned) stock standards and standards for the elements of working capital necessary for the normal operation of the enterprise. The normalized working capital includes all working capital assets and finished products.
Non-standardized working capital includes all circulation funds, except for finished products in the warehouses of the enterprise.
The lack of regulation of these components of working capital does not exclude the need for their analysis and control.
Figure 3.11. Composition and structure of working capital
depending sources of formation working capital, they are divided into: own, borrowed and borrowed funds
Own funds enterprises - are formed at the expense of the enterprise's own capital - the authorized and reserve capital and profit remaining at the disposal of the enterprise after paying taxes. Financing the needs of production for running costs in the minimum volume, as a rule, is provided by own working capital. The increase in the standard of own working capital is financed primarily at the expense of own resources.
Temporary additional need for working capital is covered by borrowed money. They are formed at the expense of bank loans and loans.
Involved funds are formed at the expense of the company's accounts payable (debt on wages to employees, debt to the budget to suppliers, as well as funds for targeted financing before they are used for their intended purpose.).
By degree of liquidity Working capital is divided into:
- the most liquid(cash in the accounts of the enterprise, on hand and short-term financial investments);
- marketable assets(accounts receivable for goods, the payment term for which is less than 12 months, debt with the budget and other debtors);
- slow-moving assets(accounts receivable for goods, the payment term for which is more than 12 months, production stocks of raw materials, materials, fuel, etc.).
This division is not permanent and depends on the specific situation that is developing on this moment at the enterprise. There may be such a situation that stocks of surplus materials, raw materials , fuel will be sold before short-term receivables from consumers are received, etc.
Indicators of the use of working capital
The amount of working capital should be minimally sufficient. AT modern conditions the correct determination of the need for working capital is of particular importance.
The need for working capital depends on the prices of raw materials and materials, the conditions of their supply, the general market situation, the production program of the enterprise, etc. Therefore, the amount of working capital should be periodically adjusted to reflect changes in these factors.
Let's consider two examples of the organization of deliveries at the enterprise:
Option 1: Deliveries are made once every 30 days. The value of the purchased lot is 1000 rubles. Sales volume 2000 rubles.
Figure 3.12. Option 1: Inventory and revenue dynamics
The average value of the stock for the period is 500 rubles.
Figure 3.13. Inventory dynamics.
Option 2. Deliveries are made once every 30 days. The value of the purchased lot is 500 rubles. Sales volume 2000 rubles.
Figure 3.14. Option 2: Inventory and revenue dynamics
The average value of the stock for the period is 250 rubles.
Figure 3.15. Inventory dynamics
As we can see, in order to achieve the same sales volume, the amount of working capital may vary depending on the frequency and size of deliveries.
The efficiency of the use of working capital characterizes the main generalizing indicator - the turnover of working capital.
The turnover of working capital is the speed at which the working capital of an enterprise goes through the entire cycle of circulation - from the acquisition of resources and their entry into the production process to the sale of products and the receipt of funds for it from customers, buyers (Fig. 3.15).
Figure 3.16. The structure of the turnover of working capital
The turnover of working capital is not the same at different enterprises and depends on their industry affiliation, and within the same industry - on the organization of intra-production logistics, the placement of working capital and other factors.
The main indicators of the efficiency of working capital turnover are:
Working capital turnover ratio,
Duration of one turn in days
Working capital utilization factor.
The turnover ratio of working capital (Kob) shows the number of circuits made by working capital for a certain period of time, characterizes the intensity of their use, and at the same time shows the volume of sales per 1 ruble of fixed assets.
The turnover ratio of working capital is determined by the ratio of the volume of products sold in monetary terms to the average annual balance of working capital
where Pr - proceeds, revenue, volume of products sold, in monetary terms;
– current assets, average annual balance of working capital.
The more turnovers make working capital, the better they are used - more products are produced.
An increase in the number of revolutions leads either to an increase in output by 1 ruble of working capital, or to the fact that a smaller amount of working capital is required for the same volume of production.
Working capital utilization factor (Ku) - the inverse indicator of the turnover ratio, shows the amount of working capital spent on 1 rub. sold products/
(3.77)
The lower the coefficient, the more efficiently the working capital is used at the enterprise, its financial position improves.
The criterion for evaluating the effectiveness of the use of working capital is the duration of the period of turnover.
The duration of the turnover of working capital is determined as the ratio of the number of calendar days in the planning period (year, quarter, month) to the turnover ratio.
(3.78)
where D – number of calendar days of the period (360 days - year, 90 days - quarter, 30 days - month).
The duration of one turnover in days (Tob) allows you to judge how long working capital goes through all stages of the circuit (make a full turnover),
The shorter the duration of the turnover of working capital or the greater the number of circuits they make with the same volume of production, the less working capital is required and the faster the working capital makes a circuit, the more efficiently they are used.
The longer the period of turnover of working capital, the less efficiently they work. In this case, additional funds are diverted to replenish working capital, i.e. additional funds are involved in circulation. On the contrary, the acceleration of turnover releases cash, and they can be directed to other purposes of the enterprise.
Reducing the duration of one turnover indicates an improvement in the use of working capital.
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.
In addition to these indicators, the indicator of return on working capital can also be used, which is defined as the ratio of profit from the sale of products to the average annual balances of working capital.
The change in the turnover of funds is revealed by comparing the actual indicators with the planned or indicators of the previous period. As a result of comparing the turnover of working capital, its acceleration or deceleration is revealed. The release of working capital due to the acceleration of their turnover can be absolute and relative.
Absolute release takes place if the actual balances of working capital are less than the balances of the previous period while maintaining or exceeding the volume of sales for the period under review. The absolute release of working capital reflects a direct decrease in the need for working capital.
The absolute release of working capital is determined by the formula:
(3.79)
where Pr 0 and Pr 1 are the base (planned) and actual volumes of sold products;
Kt 0 and Kt 1 - basic (planned) and actual turnover ratios.
Relative release takes place if the growth rate of sales volume outpaces the growth rate of working capital balances.
Relative release can be in the absence of absolute release of working capital.
(3.80)
where S CA - saving, relative savings in working capital.
Increasing the efficiency of the use of working capital is ensured by the acceleration of their turnover at all stages of the circulation.
At the preparatory stage, this is a good organization of supply (achieved as a result of the selection of suppliers, the well-established operation of transport, the establishment of clear contractual conditions for deliveries and ensuring their implementation), a clear organization of the work of the warehouse.
At the productive stage, reducing the time spent by working capital in work in progress is achieved by improving the technologies used, improving the use of fixed assets (primarily the active part), and improving the organization of production.
In the sphere of circulation, the reduction in investments of working capital is achieved as a result of the rational organization of the sale of finished products, the timely execution of documentation and the acceleration of its movement, the use of progressive forms of payment, and compliance with contractual and payment discipline.
Efficient use of working capital plays an important role in ensuring the normal operation of the enterprise, in increasing the level of profitability of production.
The freezing of part of the funds in the reserves of resources, finished products creates a primary need for financing, and untimely payment for products by consumers leads to a delay in reimbursement of costs to suppliers, i.e. there is an additional need for funds. At the same time, deferrals of payments to resource suppliers, the state, etc. are favorable for the enterprise, since they provide a source of financing generated by the production cycle itself.
Thus, an important element of working capital management is the rationing of working capital
Ways to improve the use and accelerate the turnover of working capital
In the conditions of improving the economic mechanism, resource saving is considered as a decisive source of meeting the growing demand for materials, fuel, and electricity.
To achieve the set goals, it is necessary to solve a number of tasks: rational and economical use of all types of resources, reduction of their losses, the fastest transition to resource-saving and waste-free technologies, a significant improvement in the use of secondary resources and production waste, etc.
economical spending material resources acts as the most important factor of intensification. Saving materials, fuel, energy allows you to free up resources and increase production.
Attaching great importance to the rational use of material resources, it is necessary to provide for a number of economic measures that stimulate effective use working capital in enterprises.
Enterprises are granted the right to use the production, science and technology development fund for the increase in the standard of working capital, the amount of which depends primarily on the actually earned profit or income. This means that the increase in working capital is directly dependent on the financial results of the enterprise. On the other hand, there is an interest in accelerating the turnover of working capital, since the released funds remain at the disposal of the enterprise and can be directed, for example, to finance the introduction of new technology, etc.
The next way, stimulating the efficient use of working capital, is the establishment of a standard for the maximum level of inventories per unit of products sold. The establishment of this standard enables bank institutions, supply authorities and enterprises themselves, when using a loan, to have a clear idea of the economically justified, permissible size of stocks of inventory items.
The procedure for planning the marginal level of inventories served as the basis for building a new mechanism for short-term lending to an enterprise - it is being compiled overall plan short-term credit investments in production. This enables enterprises to independently maneuver borrowed funds in excess of the established level.
The listed economic measures aimed at improving the efficiency of the use of working capital and accelerating their turnover are designed to involve all employees of the enterprise in the search for reserves to reduce material costs.
The most important resource-saving factor is the improvement of the quality of the final product. There are also large reserves in the use of electricity, since in many enterprises the equipment is not loaded to full capacity.
Reducing the duration of the production cycle allows you to reduce the size of work in progress.
At the stage of selling finished products, the reserves for increasing the efficiency of the use of working capital lie in speeding up the shipment of finished products and settlements between suppliers and buyers.
Human Resources
Enterprise workforce- this is a set of employees of various professional and qualification groups employed at the enterprise and included in its payroll. The payroll includes all employees hired for work related to both its main and non-core activities.
Labor resources (personnel, personnel) of the enterprise are the main resource of each enterprise, the quality and efficiency of the use of which largely determine the results of the enterprise and its competitiveness.
The difference between labor resources and other types of enterprise resources lies in the fact that each employee can refuse the conditions offered to him and demand changes in working conditions, retraining in other professions and specialties, and can quit the enterprise of his own free will.
The main characteristics of the enterprise personnel
Staff- the personnel of the enterprise, including all employees, as well as working owners and co-owners.
After studying this chapter, you will:
know
- - concept, essence, classification of current assets of the enterprise;
- - methods for assessing the turnover of working capital and determining the need for working capital;
- - evaluation methods and ways to improve the efficiency of the use of working capital;
- - ways to improve the efficiency of the use of fixed assets, ways to increase them;
be able to
- - calculate the turnover ratio and determine the need for working capital;
- - calculate the optimal order size;
- - apply the method of ABC-analysis to manage the stocks of the enterprise;
- - offer ways to improve the efficiency of the use of working capital of the enterprise;
own
- - skills of analysis and management of working capital of the enterprise;
- - working capital management methods.
Working capital, their composition, sources of financing
working capital- these are the means of the enterprise that directly serve the reproduction process taking place on it.
Since this process is carried out both in the sphere of production and in the sphere of circulation, the working capital of an enterprise is divided into working capital operating in the sphere of production (circulating production assets) and working capital operating in the sphere of circulation (circulation funds).
Working capital in the field of production- this is the value of the means of production, which in the process of each production cycle lose their original natural form and completely transfer their value to the finished product.
Unlike fixed assets, advanced and invested once for a long period, working capital must be renewed before each new production process. Their value is entirely included in the product, and therefore, thanks to the sale of the product, it returns to the enterprise again and can be invested again.
Working capital in the sphere of circulation- these are the means serving the process of selling finished products, as well as the acquisition of raw materials, materials, etc. for new production runs.
In practice, working capital includes any funds with a service life of less than one year or a value of less than the established limit.
In the process of reproduction, the working capital of an enterprise goes through various stages. In this regard, five main groups of working capital can be distinguished: inventories; unfinished production; finished products; funds in settlements; cash. Of the listed groups, the first two - inventories and work in progress - refer to working capital, and the remaining - to circulation funds.
Productive reserves- these are raw materials and other materials received by the enterprise, but not yet transferred to production. These include stocks of basic and auxiliary materials, purchased semi-finished products and components, spare parts, containers, etc.
This group also includes low-value and wear-and-tear items put into operation in the part of their value that has not yet been written off to the cost of manufactured products.
It should be noted once again that in their economic essence, low-value and wearing items are fixed assets, their classification as working capital is due solely to the desire to simplify accounting.
Production stocks before their entry into production are, as a rule, in the warehouses of the enterprise. At the moment of their release into production, they cease to be reserves and turn into constituent part work in progress.
Unfinished production- this is not a finished product, i.e. not passed the full production cycle provided for by the technology. The cost of work in progress consists of raw materials already spent on these products, basic and auxiliary materials, fuel, energy, depreciation deductions, as well as accrued wages and deductions to off-budget funds.
With a certain degree of conventionality, the so-called deferred expenses can also be attributed to work in progress.
Finished products after the completion of its manufacture, it is stored for some time in the warehouse of finished products and then sold to consumers. Working capital, previously associated in finished products, is transferred, depending on the nature of the sale, either into cash or into funds in settlements.
Funds in settlements- this is the cost of products shipped to customers, but not yet paid for by them, as well as the cost of products paid by the enterprise, but not yet received from suppliers.
These two components are united by the fact that the enterprise in both cases fulfilled its obligations under the transactions (shipped products to consumers or paid money to suppliers), while its counterparties did not yet. It turns out that in these transactions the company lends to its counterparties for the entire period of the gap in time between the moments of its fulfillment of its obligations and the moments of fulfillment of obligations by counterparties. The amount of these loans just forms the funds in the calculations. It is obvious that the greater these gaps in time, the more working capital is forced to keep the enterprise in settlements with its counterparties.
The ratio of individual groups of working capital in their total value is called working capital structure. The structure of working capital fundamentally depends on the industry National economy. For example, in trading enterprises there is no work in progress and there are practically no inventories; the structure of material reserves in an industrial, agricultural and transport enterprise differs sharply; in some industries (for example, clothing) the share of work in progress is small, but in others (for example, shipbuilding, construction) it can reach enormous proportions. In a number of industries, such as agriculture, the structure of working capital differs sharply by months: in the first half of the year, the share of work in progress increases and the share of inventories, finished products and cash decreases, and in the second half of the year, on the contrary, the share of work in progress decreases sharply, while the share of other groups grows.
Current assets of the enterprise are formed at the expense of the enterprise's own funds and borrowed (or attracted).
Own funds- these are funds transferred to the enterprise during its establishment, added by the owners in the course of its operation, donated by sponsors, as well as its profit reinvested in the enterprise.
AT borrowed funds, in turn, it is possible to allocate long-term credits and loans. If their remaining term is five years or more, then as sources of financing for the enterprise, they may well be equated to their own funds.
The rest of the borrowings can also be subdivided into:
- - for medium and short-term loans provided by banks and other credit institutions;
- - accounts payable to suppliers and contractors;
- - other accounts payable.
These sources differ from each other both in terms of the period during which you can use the money, and in terms of fees for using them: accounts payable to one supplier can be considered as a free source, for another (if it is overdue) you have to pay penalties and fines, the use of a bank loan involves the payment of interest, and often the corresponding security, etc.
It is quite obvious that the financing of working capital should be organized in such a way that, on the one hand, it is sufficiently effective, and, on the other hand, it is economically safe. The solution of this problem is complicated by the fact that the need of the enterprise for working capital is constantly changing. Let this need look like for some enterprise, as shown in Fig. 5.1.
Rice. 5.1.
The enterprise can try to fully satisfy this need at its own expense. This means that it must invest and permanently keep in circulation an amount corresponding to the entire shaded area shown in Figure 5.2.
Rice. 5.2.
As a result, the upper (upper shaded part) of the working capital of the enterprise will, as it were, “idle”. True, an enterprise can invest temporarily free funds in deposits or force it to work in some other way. However, this “earnings” cannot be large enough, since investments are made for short and not always predetermined periods of time.
At the same time, equity capital is not at all free money, as it might seem at first glance: the owners of this capital will invest it in the enterprise only if it provides income. above, than bank deposits. In addition, it is necessary to take into account the costs associated with the issue, etc.
It turns out in this case that the payment for the use of working capital will be equal to the payment for the use of equity during the entire period minus the income that the alternative use of temporarily free funds will bring.
The diametrically opposite option is the financing of all working capital at the expense of borrowed capital. Theoretically, this option may turn out to be the cheapest, but it does not ensure the economic security of the enterprise, since it does not guarantee it.
An intermediate option is shown in Fig. 5.3: at the expense of own capital, the enterprise finances a certain irreducible balance of working capital, shown by the lower dark rectangle, while the additional need is covered by borrowed capital.
Rice. 5.3. The company's need for fixed assets: the minimum balance is financed from equity
Obviously, in this case, the payment for the use of working capital will be equal to the payment for the use of relatively small equity capital plus the payment for the use of borrowed funds, displayed by a lighter "chessboard" zone.
As practice shows, the model shown in Fig. 5.3 is usually cheaper than in fig. 5.2, although, of course, their ratio is determined by the real ratio of credit and deposit rates, as well as the "price" of equity, which is formed for a particular enterprise at a particular point in time.
The working capital financing model shown in fig. 5.3 can be a bit more precise. To do this, it is advisable to consider the economic content of the irreducible balance separately in the sphere of production and in the sphere of circulation.
In the field of production minimum balance of working capital - this is the minimum size of inventories in the warehouses of the enterprise, as well as the minimum size of work in progress, which, in accordance with the technology used and the level of organization of production, ensure the continuity of the reproduction process. Since the enterprise must always have the funds to finance them, they must be financed from the funds belonging to the enterprise. A short-term excess of these balances, associated, for example, with the uneven receipt of orders, the uneven delivery of raw materials and materials to the warehouse, etc., can be financed by accounts payable or short-term loans.
feature spheres of circulation in the sense under consideration is that in it, thanks to continuously repeated acts of purchase and sale, there are constant counter flows of demands (we must, but we must). Under normal circumstances, they may partially or fully cancel each other, i.e. part of their current assets can be financed quite legally and free of charge from the funds of their counterparties (however, counterparties can legally and free of charge be financed from our resources). Therefore, the irreducible balance of working capital in the sphere of circulation (which is equal to the minimum amount of cash, the minimum amount of shipped, but not paid for products, as well as the minimum stock of finished products in the warehouse necessary for the sustainable reproduction process in the sphere of circulation) must be compared with the minimum balance accounts payable (including arrears of wages, payments to the budget and off-budget funds), which acts here as a source of financing for working capital.
The excess of the first balance over the second, if it exists (since we are talking about irreducible balances), is of a permanent nature and, therefore, must be financed from the enterprise's own funds. Short-term increases in this excess should be financed primarily at the expense of counterparties' money (increasing current accounts payable and reducing accounts receivable), and if this fails - at the expense of short-term loans.
In general, the idea of rational financing of current assets of an enterprise can be represented as a “house” (Fig. 5.4), in which the “building” itself is financed from equity, the attic is financed from a permanent balance of accounts payable, the roof, reflecting seasonal changes in the need for working capital funds - at the expense of short-term targeted bank or other pre-planned loans, and snowdrifts on the roof, i.e. random fluctuations - at the expense of counterparties' money.
We emphasize once again that this "house" is just an illustration ideas rational financing of working capital. The practical implementation of it will inevitably be the result of a compromise between the desire for security and profitability, specific to each particular enterprise.
