One of the classic economic processes is capital turnover. It consists of two stages:
Finding the value of objects of labor in the inventory of the enterprise;
Its passage through the stages of work in progress and costs of future periods.
This turnover is carried out in the production process.
The main attribute that participates in this turnover is financial resources, which the enterprise or company advances into working capital. Such funds were named in economic theory- current assets of the enterprise. The most common indicator for this economic category the concept of working capital is used, which denotes a certain amount (part) of the total productive capital of the enterprise, which is completely consumed in one full turnover, transfers the value to the result of production and returns to the enterprise in the form of money.
How effectively the current assets of the enterprise function depends on the nature of the ratio of the size of the working capital and capital circulation. The higher its share, the efficiency current assets above, and, accordingly, vice versa.
In addition, the assessment of working capital includes other indicators. The main ones are material consumption and turnover, which are characterized by a number of coefficients:
The time duration of the turnover;
Load factor;
Return coefficient;
Release parameters.
The relationship between the components and stages of the passage of the turnover is called the structure of current assets.
WORKING CAPITAL OF THE ORGANIZATION AND
EFFICIENCY OF ITS USE
Economic content of working capital
Working capital expresses a set of property values that serve the current operating activities of the enterprise and are fully consumed during one production cycle.
Working capital enterprises are cash advanced into current assets that are continuously circulated within one year or one production cycle. They serve the uninterrupted process of production and sale of products and at the same time are at all stages of this process in monetary, production and commodity form.
A feature of working capital is that it is not spent, not consumed, but advanced, which implies the return of funds after each production cycle or circuit, including the production of products, their sale, receipt of proceeds.
Economic essence working capital determined by their role in ensuring the continuity of the reproduction process, during which they pass through the sphere of production and circulation.
The circulation of capital takes place continuously, and there is also a constant change in the advanced value. At the same time, working capital in different forms is present at all stages, ensuring the continuity of the production process.
The formula for the movement of working capital can be represented as follows:
DS → MPZ → WIP → GP → DS ",(6.1)
Where DS- funds advanced into current assets;
MPZ- inventories;
WIP - unfinished production;
GP- finished products;
DS "- cash in the form of proceeds from sales .
DS "= DS + ∆DS, (6.2)
Where ∆DS- change in the amount of working capital;
at ∆DS<0 - the enterprise is unprofitable;
at ∆DS> 0- working capital is increased by the amount of profit.
To ensure the normal operation of the enterprise, working capital must be at all stages of the production process and in all forms (monetary, productive and commodity).
The composition and placement of working capital are shown in Fig. 6.1.
Fig. 6.1. Composition and placement of working capital
By functional purpose working capital is subdivided into circulating production assets and circulation funds.
Revolving production assets serve the sphere of production and materialize in objects of labor (raw materials, materials, fuel) and partially in means of labor and are embodied in production inventories, semi-finished products of their own manufacture. Along with these elements involved in production inventories and work-in-progress, working production assets are also represented by deferred expenses required to create reserves and install new equipment.
Revolving production assets have a number of features:
· Are completely consumed in a single production cycle;
· Undergo a change in their natural-material form and lose use value;
· Their annual turnover depends on the production cycle (there may be several cycles per year);
· Transfer their value entirely and immediately to the finished product.
Circulation funds do not participate in the production process, their purpose is to provide resources for the circulation process and service the circulation of enterprise funds. Circulation funds consist of finished products and cash.
Consolidation of circulating production assets and circulation funds in a single category is due to the purpose and essence of circulating assets, the purpose of which is to ensure the continuity of the reproduction process.
It is necessary to distinguish between the concepts of "working capital" and "own working capital".
Own working capital characterize that part equity capital the organization that is the source of funding for its current assets.
The amount of own working capital is a calculated indicator, for the determination of which there are the following methods:
1) in general terms, the value of own circulating assets can be calculated by the formula:
SOS = SK - VA, (6.3)
Where SOS
SK -
VA -
2) for financially stable organizations, the value of their own working capital can be determined by the formula:
SOS = SK + DO - VA, (6.4)
Where SOS- own circulating assets of the enterprise;
SK - equity capital of the organization (p. 490 balance sheet);
VA -fixed assets(page 190 of the balance sheet);
BEFORE -long term duties(page 590 of the balance sheet);
1) own working capital can be determined based on a modification of the previous formula:
SOS = OA - KO, (6.5)
Where SOS- own circulating assets of the enterprise;
OA- current assets (page 290 of the balance sheet);
KO – Short-term liabilities(page 690 of the balance sheet).
The value of own circulating assets depends on the structure of circulating assets and the structure of their funding sources. All other things being equal, the growth of this indicator in dynamics is regarded as a positive trend.
Since working capital includes both material and monetary resources, the production process and financial stability enterprises. Rational management of the company's current assets involves:
1) determination of their composition and structure;
2) establishing the need for working capital;
3) identification of the sources of their formation.
4) efficient use working capital.
Composition and structure of the company's current assets
From the standpoint accounting current assets Are assets that can be converted into cash within one year.
In practice, the composition and structure of the company's current assets are distinguished.
Under composition of current assets enterprises understand the totality of their constituent elements.
Current assets can be classified according to various criteria.
1. By area of accommodation Current assets are divided into two groups:
1) current assets in the field of production:
- inventories;
- unfinished production;
- future spending;
2) current assets in the sphere of circulation:
- finished goods, goods for resale;
- goods shipped;
- settlements with debtors;
- cash.
2. As reflected in the balance sheet current assets are grouped into the following groups:
1) stocks including:
· Raw materials and basic materials, fuel, containers, spare parts, purchased semi-finished products and components, low-value and quickly wearing out items;
· unfinished production;
· Finished products;
· Goods for resale, other supplies and costs.
2) accounts receivable, including:
· Buyers and customers;
· Promissory notes receivable;
· Debts of subsidiaries and affiliates;
Arrears of participants (founders) on contributions to authorized capital;
· Advances issued;
· Other debtors.
3)short term financial investments:
- investments for a period not exceeding one year in securities other businesses;
- bonds of state and municipal loans;
- loans provided to other businesses.
4)cash: cash desk, current accounts, foreign currency accounts, other funds.
3. By the degree of liquidity Current assets are subdivided into the following groups:
1) absolutely liquid assets :
- cash;
- short-term financial investments;
2) quick realizable assets :
- finished products;
- goods shipped;
- accounts receivable, payments for which are expected within 12 months;
3) slow-moving assets :
- productive reserves;
- unfinished production;
- future spending;
- doubtful accounts receivable;
4)hard-to-sell assets :
- accounts receivable with a maturity of more than 12 months.
The division of circulating assets into quickly and slowly realizable is not absolute and depends on the specific situation. Factors affecting asset liquidity include:
· Demand for products;
· Competitiveness of products;
· Timeliness of shipment of products;
· Timeliness of registration of bank documents;
· Speed of payment documents in banks;
· Solvency of buyers;
· Forms of payments.
Structure of current assets characterizes the share of each article in their total volume. It is established according to the results vertical analysis the second section of the balance sheet in dynamics over several years.
The structure of current assets depends on the following factors:
- industry characteristics and type of activity of the enterprise;
- the complexity and duration of the production cycle;
- terms of delivery of products;
- settlement procedure;
- settlement and payment discipline.
The stability of the structure of current assets is a sign of a stable, well-oiled process of production and sales of products. Reasons for negative structural changes are:
1) a significant decline in the volume of production and sales of products;
2) the crisis of non-payments;
3) high rates of inflation;
4) an increase in the tax burden.
The following microeconomic factors also affect the structure of current assets:
1) production - the composition and structure of production costs, its type (single, small-scale, serial, mass), the nature of the products, duration technological process and etc.;
2) peculiarities of procurement of material resources: frequency, regularity and completeness of supplies, mode of transport, proportion of components;
3) forms of settlements with suppliers and buyers of products (works, services);
4) demand for products, which affects the amount of finished product balances in the warehouse and accounts receivable;
5) accounting policy enterprises.
Current assets are assets that serve or mature within 12 months, or during the organization's normal operating cycle (if it exceeds 1 year). Many current assets are used simultaneously when they are released into production (for example, raw materials and supplies). Current assets are one of two groups of assets of the organization (the second is non-current assets). Accordingly, one of the two sections of the Balance Sheet Asset has the name "Current Assets". Current assets are also called current assets.
Composition of current assets
In accordance with the form of the balance sheet, the following current assets are distinguished:
- - stocks;
- - VAT on purchased assets;
- - receivables;
- - financial investments (excluding cash equivalents);
- - cash and cash equivalents;
- - other assets that meet the characteristics of current assets.
Accounts receivable and financial investments are classified as current assets only if their maturity is less than 1 year, or their maturity exceeds 1 year, but the organization is confident in the high liquidity of these assets, the ability to quickly and without loss convert them into cash (i.e. e. to sell).
Current assets, in principle, have a higher degree of liquidity than non-current assets. And money, as part of current assets, has absolute liquidity.
The current assets of the enterprise can be subdivided into many classification criteria, the main of which are the following:
- 1. By the form of functioning of current assets:
- 1) tangible assets, i.e. assets in tangible material form:
- - production stocks of raw materials and semi-finished products,
- - the volume of work in progress,
- - stocks of finished products intended for sale,
- - others;
- 2) financial assets characterizing various financial instruments owned or owned by the enterprise:
- - monetary assets in national currency,
- - monetary assets in foreign currency,
- - accounts receivable in all its forms,
- - short-term financial investments;
- 2. By types of current assets:
- 1) stocks of raw materials, materials and semi-finished products. This type of circulating assets characterizes the volume of their incoming material flows in the form of stocks that ensure the production activities of the enterprise;
- 2) stocks of finished products. This type of circulating assets characterizes the volume of their outgoing material flows in the form of inventories of manufactured products intended for sale. In foreign practice of financial management, the volume of work in progress is usually added to this type of current assets (taking into account the coefficient of its completion for certain types of products and in general).
However, if the enterprise has a long production cycle and a significant volume of work in progress, it is necessary to separate it into an independent type of circulating assets, as provided by the current Russian standards accounting;
- 3) accounts receivable, characterizing the amount of debt in favor of the enterprise, represented by financial liabilities for payments for goods, services, advances issued, etc .;
- 4) cash. In the foreign practice of financial management, they include not only cash balances in all their forms, but also the amount of short-term financial investments, which are considered as a form investment use temporarily free balance of funds. Forms of Russian financial statements the amounts of short-term and long-term financial investments are allocated as an independent type of enterprise assets;
- 5) other types of current assets are other types of assets reflected in the second section of the balance sheet asset (deferred expenses, VAT received, etc.).
- 3. By sources of formation of current assets:
- 1) gross current assets. This is the entire set of current assets of the enterprise, formed both at the expense of its own and at the expense of borrowed capital;
- 2) net current assets. This is a set of assets of an enterprise formed by equity and long-term liabilities;
The amount of net current assets (net working capital) is calculated using the following formula:
CHOA = OA-TFO, (1)
where CHOA - the sum of the company's net current assets; ОА - the sum of the gross current assets of the enterprise; TFO - short-term (current) financial liabilities of the enterprise.
3) own current assets. This is a set of assets of an enterprise formed exclusively by equity capital.
The amount of the company's own current assets is calculated using the formula:
SOA = OA-DZK-TFO, (2)
where SOA is the sum of the company's own current assets; ОА - the sum of the gross current assets of the enterprise; DZK - long-term borrowed capital invested in the company's current assets; TPO - current financial liabilities of the enterprise.
If long-term liabilities are not used as a source of financing for working capital, then the values of own and net current assets are the same.
- 4. By the degree of liquidity of current assets:
- 1) assets in an absolutely liquid form, i.e. assets that do not require sale and represent ready-made means of payment (monetary assets in national and foreign currencies);
- 2) highly liquid assets. These are the assets of the enterprise that can be quickly converted into monetary form without losing their current market value in order to ensure timely payments for current financial commitments(short-term financial investments, normal short-term receivables);
- 3) mid-liquid assets. These are the assets of the enterprise, which can be converted into monetary form without tangible losses of their current market value within a period of up to six months (accounts receivable in all forms, except for short-term and hopeless ones, stocks of finished goods intended for sale);
- 4) low liquid assets. These are the assets of the enterprise that can be converted into monetary form without tangible losses of their current market value in a period of six months or more (stocks of raw materials and semi-finished products, stocks in the form of work in progress);
- 5) illiquid assets. These are the types of enterprise assets that cannot be realized independently, without the sale of the enterprise itself (bad accounts receivable, deferred expenses).
- 5. For the period of functioning of current assets:
- 1) the constant part of current assets is the minimum minimum of circulating assets required by an enterprise to carry out operating activities continuously during a new period;
- 2) the variable part of current assets is a changing part of current assets, the need for which arises during periods of seasonal or opportunistic increase in production volumes or inventories of goods and materials.
The structure of current assets is understood as the ratio between the elements in total amount working capital. The structure of current assets is influenced by the specifics of specific production, supply, the accepted procedure for settlements with buyers and customers. The study of the structure is the basis for predicting future changes in the composition of working capital.
The structure of the company's current assets, first of all, reflects the specifics of the operating, financial cycle of the company. The composition and structure of current assets depends on the production cycle, as well as on economic and organizational factors (for example, in mechanical engineering, where the production cycle is quite long, work in progress is a significant part, in food, raw materials and supplies constitute a significant part).
The composition and structure of current assets should be considered depending on:
- - functional role in the production process (circulating production assets and means of circulation);
- - liquidity, that is, the speed of conversion into cash;
- - the degree of risk of capital investment.
- - industry specific features of production and the nature of the activity;
- - the complexity of the production cycle and its duration;
- - the cost of stocks, the terms of their delivery and its rhythm;
- - settlement procedure and settlement and payment discipline;
- - fulfillment of mutual contractual obligations
To analyze the structure of circulating assets, the proportions of the constituent elements of circulating assets in their total value are determined using vertical analysis.
Vertical (structural) analysis is carried out in order to determine the structure of the final financial indicators, i.e. identifying the proportion of individual reporting items in the overall final indicator (identifying the impact of each position on the result as a whole).
This method allows you to determine the proportion of elements of working capital:
Di = obsi / obs, (3)
where Di is the share of the working capital component; Obsi - the value of the component of current assets; Obs - the result of the organization's current assets.
Knowing the share of each major component in current assets, you can draw certain conclusions about the quality of resource management in the company. So, for example, a significant share of receivables indicates ineffective work with buyers and customers, a significant share of inventory may be associated with:
an increase in the volume of purchases of raw materials and materials due to an increase in prices for basic types of raw materials or an ineffective procurement management system;
an increase in the volume of production, which, in turn, leads to an increase in inventories;
poor-quality planning, lack of a clear relationship between procurement and production activities, etc.
To assess the dynamics of the structure, a horizontal method is used, which makes it possible to determine:
Absolute structure change:
Di = Di1 - Di0, (4)
where Di is the absolute deviation; Di1 - indicator reporting period; Di0 - indicator of the base period.
Relative change:
Tpr (Di) = (Di1 / Di0) x 100%, (5)
where Тпр (Di) - relative deviation; Di1 - indicator of the reporting period; Di0 - indicator of the base period.
So, knowing the composition and structure of current assets, as well as the dynamics of their change, it is possible to determine in which direction the organization is moving. Also, therefore, one can judge the quality of management.
The structure of working capital is understood as the ratio of individual elements in their entire totality.
Knowledge and analysis of the structure of working capital at the enterprise have a very essential, since it characterizes to a certain extent the financial condition at one time or another of the work of the enterprise. For example, an excessive increase in the share of receivables, finished goods in stock, work in progress indicates a deterioration financial condition enterprises. Accounts receivable characterizes the diversion of funds from circulation of this enterprise and their use by Debtors, debtors in their turnover. An increase in the share of work in progress, finished products in the warehouse indicates the diversion of working capital from circulation, a decrease in sales, and therefore profit. All this testifies to the fact that the working capital at the enterprise must be managed in order to optimize their structure and increase their turnover.
Since the new material values(new value) are created in the production process, then the structure of circulating assets (and, consequently, the efficiency of their use) will be all the more favorable, the larger their share serves the sphere of production, i.e. the greater the proportion in the total amount of working capital is occupied by working capital.
The structure of working capital at the enterprise is unstable and changes over time under the influence of many reasons.
1. The specifics of the enterprise. At enterprises with a long
production cycle(for example, in shipbuilding) the share of work in progress is high; at mining enterprises there is a large proportion of deferred expenses. At those enterprises whose production process is short-lived, as a rule, there is a large proportion of production stocks;
2. The quality of the finished product. If an enterprise produces low-quality products that are not in demand among buyers, then the share of finished products in warehouses increases sharply;
3. The level of concentration, specialization, cooperation, and combination of production;
4. Acceleration of scientific and technological progress. This factor affects the structure of circulating assets in many ways and practically on the ratio of all elements. If the enterprise introduces fuel-saving equipment and technology, waste-free production, then this immediately affects the decrease in the share of inventories in the structure of working capital.
An important indicator structure of working capital is the ratio between the funds invested in the sphere of production and in the sphere of circulation. Their normal functioning, the speed of turnover and the completeness of the performance of their inherent functions: production and payment and settlement largely depend on the correct distribution of the total amount of working capital between the sphere of production and the sphere of circulation (Figure 1).
Figure 1 - The structure of the company's current assets
Thus, according to the economic content, current assets can be classified into:
Revolving production assets;
Circulation funds.
The division of circulating assets into circulating production assets and circulation funds is due to the presence of two spheres of individual circulation of funds: the sphere of production and the sphere of circulation. Reflecting the peculiarities of their sphere of application, revolving funds and circulation funds are interrelated and interdependent.
Therefore, the increase in the efficiency of the use of working capital is achieved by the best use of both working capital and circulation funds. The composition of circulating assets is understood as a set of elements that form circulating production assets and circulation funds.
The elements of working capital are: raw materials, basic materials and purchased semi-finished products; auxiliary materials; fuel and fuel; container and container materials; spare parts for repair; tools, household inventory and other wearing items; work in progress and semi-finished products of our own production; future spending; finished products; goods shipped; cash; debtors; others.
According to the place and role in the reproduction process, circulating assets are divided into the following four groups:
Funds invested in production inventories;
Funds invested in work in progress and prepaid expenses;
Funds invested in finished products;
Cash and settlements.
According to the degree of planning, working capital is divided into standardized and non-standardized. Non-standardized items include goods shipped, cash and settlements. All other elements of working capital are subject to standardization
According to the sources of formation, working capital is divided into own (and equated to them) and borrowed.
Having your own and borrowed money in the turnover of the enterprise is explained by the peculiarities of the organization of the production process. A constant minimum amount of funds to finance production needs is ensured own funds... The temporary need for funds, which arose under the influence of reasons dependent and independent of the enterprise, is covered by a loan and other borrowed sources.
Current assets - these are cash and cash equivalents, not restricted in use, as well as other assets of the enterprise held for sale or consumption during the operating cycle or within 12 months from the date of the balance sheet.
In the production sphere, circulating assets are advanced into circulating production assets and circulation funds (Fig. 6.1).
Fig. 6.1. The structure of the company's current assets
Production assets include:
Basic and auxiliary materials;
Semi-finished products;
Fuel;
Spare parts for repairs;
Low value and wearing out items;
Unfinished production;
Self-made semi-finished products;
Future spending.
Circulation funds - these are the balances of finished products in the warehouse of enterprises, goods shipped but not paid for by buyers, balances of enterprises' funds on the current account in the bank, cash desk, in settlements, in accounts receivable, as well as enclosed in short-term securities.
Circulation funds include:
Finished products in the warehouses of the enterprise;
Finished products that have been shipped and are in transit;
Cash in settlements and other accounts;
Cash in pending settlements
Receivables;
Cash at the checkout.
Classification of current assets of the enterprise in accordance with the Regulation (standard) of accounting 2 "Balance" (Figure 6.2).
So, current assets - these are funds advanced into circulating production assets and circulation funds to ensure the continuity of the production process, product sales and profit.
Fig. 6.2. Classification of current assets
Despite the differences in purpose, revolving funds and circulation funds are closely interrelated. They serve a single reproduction process in production and ensure its continuity. At the same time, circulating funds and circulation funds are components of circulating assets, reflecting their placement in the spheres of reproduction in the process of movement, and at the same time as independent economic categories.
An economic category that objectively exists is current assets. To find out economic content of circulating assets, it is necessary to distinguish between their functional forms, which they constantly recruit and change, passing through the spheres of production and circulation, to associate the movement (change) of these functional forms with the movement of their material carriers, and also to consider circulating assets as a category in motion.
If the production process at each enterprise is continuous, then the circulating assets serving it are at each moment located simultaneously both in the sphere of production in the form of inventories, work in progress, and in the sphere of circulation in the form of finished goods and cash. In addition, they move from the sphere of production to the sphere of circulation and vice versa, that is, they are constantly in motion, going through three stages of circulation - money, commodity and production.
The ratio of circulating assets in the sphere of production and the sphere of circulation depends on the peculiarities of the organization of production, supply, sales, as well as the settlement system.
To ensure the continuity of the production process and sales of products, it is necessary to achieve the optimal ratio of circulating assets in the field of production and circulation. The company is interested in reducing circulating assets in the sphere of circulation by improving the supply system, rational forms of settlement.
In the economic literature, there are other views on the essence of current assets. Some economists interpret them as "monetary funds" advanced into circulating production and circulation funds, "others believe that circulating assets are a part of the enterprise's capital invested in its current assets, or it is funds advanced for the creation of circulating production assets and circulation assets. But current assets include both material and monetary resources. Therefore, identify them only with in cash not economically justified.
In the organization of circulating assets, one should distinguish between their composition and structure.
Composition of current assets- a set of individual elements (items) of circulating production assets and circulation funds
Structure of current assets- This is the ratio of individual elements of current assets in their total volume.
