Under structure working capital the ratio between the elements in the total amount of working capital is understood. 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.
Structure current assets the enterprise, 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 (for example, in mechanical engineering, where production cycle, a significant share is work in progress, in food, a significant share is raw materials and supplies), as well as from factors of an economic and organizational order.
The composition and structure of working capital should be considered depending on:
- functional role in the production process (circulating production assets and means of circulation);
- liquidity, that is, the rate of conversion into cash;
- the degree of risk of capital investment.
Some authors believe that when analysis of the composition and structure of current assets it is necessary to take into account their dependence on many factors of a production, organizational and economic nature, such as:
- sectoral 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 working capital, the specific weights of the constituent elements of working capital 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
Where,
Di is the share of the working capital component;
Obsi - the value of the working capital component;
Obs - the result of the working capital of the enterprise.
Knowing the share of each major component in current assets, you can draw certain conclusions about the quality of resource management in the company. For example, a significant proportion of accounts receivable indicates ineffective work with buyers and customers, a significant proportion 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, we use horizontal method which allows you to define:
- Absolute structure change: Di = Di1 - Di0
- Relative change: Tpr (Di) = (Di / Di0) x 100%
Consider an example of analyzing the structure of the company's current assets... The calculation results are presented in the form of a table.
Table 1. Dynamics of changes in the structure of current assets
| Index | Last year, thousand roubles. | Specific gravity, (shares) | Reporting period, thousand rubles | Specific gravity, (shares) | Abs. deviation (share) | Growth rate,% |
|---|---|---|---|---|---|---|
| Current assets | 800,0 | 1,000 | 871,5 | 1,000 | ||
| Stocks | 590,0 | 0,738 | 615,5 | 0,706 | -0,031 | -4,2% |
| Receivables | 85,0 | 0,106 | 89,5 | 0,103 | -0,004 | -3,3% |
| Financial investments | 20,0 | 0,025 | 22,0 | 0,025 | 0,000 | 1,0% |
| Cash | 95,0 | 0,119 | 133,5 | 0,153 | 0,034 | 29,0% |
| Other current assets | 10,0 | 0,013 | 11,0 | 0,013 | 0,000 | 1,0% |
Based on the calculated data, it follows that the main share in current assets is made up of inventories, in the past period their share was equal to 73.8%, in reporting period it dropped to 70.6%.
The share of reserves in current assets depends on the specifics of production activities. A sufficiently large stock can save an enterprise in the event of an unexpected shortage of appropriate stocks from stopping the production process or buying more expensive substitute materials. An unreasonable increase in the share of stocks can lead to a significant increase in the costs associated with their storage.
The share of accounts receivable is insignificant, not more than 10.6%, and during the reporting period it decreased by 3.3%, which is positive factor... The share of funds has significantly increased, which has a positive effect on the company's ability to meet its current liabilities in a timely manner.
Working capital is the amount Money advanced to create negotiable production assets and circulation funds.
Revolving production assets - this is a part of the means of production that once participates in the production process, immediately and completely transfers its value to the manufactured products and, in the production process, changes (raw materials, materials) or loses (fuel) its natural-material form. These include: raw materials, basic and auxiliary materials, components, not finished products, fuel, containers, overalls, deferred expenses, etc.
Circulation funds include funds serving the process of selling products (finished products in a warehouse; goods shipped to customers, but not yet paid by them; funds in settlements; cash at the cash desk of the enterprise and in bank accounts). They do not participate in the production process, but are necessary to ensure the unity of production and circulation.
Working capital ensure the continuity and rhythm of all processes occurring at the enterprise: supply, production, sales, financing. Up to 40% of all enterprise resources are concentrated in circulating assets. The current assets of the enterprise are constantly in motion, making a circuit. The cycle begins with the payment in cash of the material resources necessary for the enterprise, and ends with the return of all costs along the entire path of the movement of funds in the form of proceeds from sales finished products... Then the cycle repeats. Thus, in the process of circulation, circulating assets successively go through the following stages:
- 1. Cash - at this stage, cash is funded into the necessary items of labor.
- 2. Productive - at this stage, there is a qualitative change in the objects of labor into finished products, i.e. the production process is carried out directly.
- 3. Commodity - the stage of finding circulating assets in objects of labor and finished products.
The circulating assets function simultaneously at all stages, ensuring the continuity of the production process. By this, the circulating assets perform their most important function - production: cash security the continuity of the production process.
At the same time, circulating assets perform another equally important function of payment and settlement. The performance of this function depends on the availability of working capital necessary for the implementation of the process of selling finished products and completing the calculations.
For normal production and commercial activities the enterprise requires the availability of working capital in the minimum required amounts not only for advancing them into the production sphere, but also into the sphere of circulation. The correct organization, safety and efficiency of the use of working capital are of great importance for the sustainable financial condition of the enterprise.
Composition and classification of working capital
The composition and structure of working capital are not the same in different sectors of the economy. On each specific enterprise the amount of working capital, their composition and structure depend on many factors of a production, economic and organizational nature, such as:
- 1. Sectoral features of production and the nature of the activity.
- 2. The complexity of the production cycle and its duration.
- 3. The cost of inventories and their role in the production process.
- 4. Terms of delivery and its rhythm.
- 5. The procedure for settlements and settlement and payment discipline.
- 6. Fulfillment of mutual contractual obligations.
The value of finished goods, goods shipped, accounts receivable is influenced by such factors as the conditions of sale of products, the form and state of settlements.
Considering the classification of working capital, they can be divided into:
- 1. According to the economic content - to circulating production assets and circulation funds.
- 2. By the method of formation - for own and borrowed.
- 3. According to the planning method - into standardized and non-standardized.
The division of circulating assets into circulating production assets and circulation funds is due to the presence of two spheres of the circulation of funds - the sphere of production and the sphere of circulation. Economic content working capital assets are embodied in objects of labor, which, serving the production process, i.e. being the object of the application of means of labor and labor, they are transformed into a finished product, completely transferring their value to it. The economic content of circulation funds is embodied in finished products, monetary funds and means in calculations serving the process of circulation of the social product.
Having your own and borrowed money in the turnover of the enterprise is explained by the peculiarities of financing the production process. The constant minimum amount of funds to finance the needs of production must be provided with its own circulating assets. The company's own funds are primarily authorized capital and profits remaining at the disposal of the enterprise after all taxes have been paid.
The temporary need for funds associated with objective and subjective reasons is covered by borrowed funds. The most typical reasons for the lack of own working capital are overdue accounts receivable, an increase in the period of the production cycle, an expansion of production, an increase in inventories, an increase in the cost of objects of labor, etc. Borrowed funds include bank loans, payables and other liabilities.
Financing part of the working capital at the expense of borrowed funds is considered a completely normal operation. All enterprises, to one degree or another, attract borrowed funds to finance the circulation of working capital. Moreover, each enterprise has so-called stable liabilities - an irreducible, constant balance of accounts payable, consisting of wage arrears, to the budget, on deductions to social funds etc.
The problem of attracting borrowed funds is the observance of proportions in the structure of financing of working capital. The ratio between the amounts of own and borrowed funds characterizes the financial stability of the enterprise. It is believed that the larger the share own funds, the more financially stable it is. In general world practice, it is accepted that an enterprise loses its financial stability (independence) if less than 10% of the total working capital is financed from its own funds.
The economic basis for dividing working capital into standardized and non-standardized is the need for their planning to ensure the smooth operation of the enterprise. Planning of working capital occurs by rationing them in one part and not rationing the other. The purpose of establishing planned standards for individual items of working capital is to ensure continuous, rhythmic work of the enterprise with a minimum stock of inventory.
The composition of working capital is understood as a set of elements (items) that form working capital. The structure of working capital is understood as the ratio between their items. As already noted, circulating assets are divided into circulating production assets and circulation funds. The revolving production assets include:
- 1. Production stocks - items of labor received by the enterprise for further processing or to ensure the production process (stocks of raw materials, materials, components, fuel, low-value and wearing out items, containers, etc.).
- 2. Work in progress - objects of labor that have entered the production process and are located at and between workplaces (blanks, semi-finished products, parts, units, products that have not passed all stages of processing).
- 3. Deferred expenses - the cost estimate of the costs of preparation and development of new types of products produced in this period, but payable in the future.
The circulation funds include:
- 1. Finished goods, goods for resale and goods shipped are objects of labor that have passed all stages of processing and are ready for sale, ie. products of labor.
- 2. Accounts receivable - debts to the company from legal entities, individuals and the state. Accounts receivable include buyers 'and customers' debts, promissory notes receivable, debts of subsidiaries and dependent companies, debts of founders for contributions to the authorized capital, advances issued.
- 3. Cash.
In the company's balance sheet, current assets are reflected in the second section of the balance sheet asset "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 is 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 circulating assets;
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.
Rice. 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 stocks, 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.
The combination of circulating production assets and circulation funds into 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 liabilities (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);
NS – 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 the financial stability of the enterprise depend on their organization. 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 the authorized capital;
· Advances issued;
· Other debtors.
3)short term financial investments:
- investments for a period not exceeding one year in securities of other enterprises;
- 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 divided 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 current assets into quickly and slowly sold 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.
) consumer cooperation organizations refer to mobile assets. The elements of circulating capital are continuously transferred from the sphere of production to the sphere of circulation and again return to production. Part of the working capital is constantly in the sphere of production, i.e. forms a production cycle (production stocks, work in progress, finished goods in a warehouse, etc.).
The other part is in the sphere of circulation, forming a financial cycle (shipped products, accounts receivable, cash, securities, etc.). Therefore, the composition and size of the working capital of the enterprise is determined not only by the needs of production, but also by the needs of circulation.
The composition of circulating assets is understood as a set of elements that form circulating production assets and circulation funds.
In the practice of planning accounting and analysis, current assets are grouped according to the following criteria:
1. By nature financial sources formations distinguish gross, net and own current assets.
a) gross current assets (or circulating assets in general) characterize their total volume, formed at the expense of both own and borrowed capital. In the balance sheet of the organization, they are reflected as the sum of the second section of its asset.
b) net current assets (or net working capital) characterizes that part of their volume, which is formed at the expense of own and long-term borrowed capital.
The amount of net current assets is calculated using the following formula:
CHOA = OA - KFO,
where CHOA is the sum of net current assets;
ОА - the sum of gross current assets (section of the second asset of the balance sheet);
KFO - short-term current financial liabilities(section five of the balance sheet liability);
The amount of net working capital can also be determined by the formula:
CHOA = SK + DZK - VA,
where SK is equity (section three of the balance sheet liability);
DZK - long-term borrowed capital(section four of the balance sheet liability);
VA - non-current assets (section one of the balance sheet asset).
Net working capital is important indicator the financial strength of the organization, its reliability as a recipient of current loans. The presence of this capital is necessary to maintain a stable financial position of the organization.
c) own current assets (own circulating assets) or (own net working capital) characterize that part of them, which is formed at the expense of the organization's own capital. The calculation of their amount is similar to that stated above, but without long-term debt capital.
The value of own circulating assets of consumer cooperation organizations is calculated by the formula:
SOA = OA - DZK - KFO,
where SOA - own current assets;
ОА - gross current assets;
DZK - long-term borrowed capital invested in the current assets of the enterprise;
KFO - short-term (current) financial liabilities of the enterprise. The amount of own net working capital can also be determined by the formula:
SOA = SK - VA,
The presence of its own working capital is one of the main features financial sustainability... A negative value of equity capital means that accounts payable exceeded current assets, i.e. the solvency of the enterprise is very problematic. For normal security economic activity working capital, their value is set within 1/3 of the value of equity capital. Own working capital is in permanent use.
If the organization does not use long-term borrowed capital to finance working capital, then the amounts of its own and net working assets are the same.
2. In terms of material content, the following types of current assets are distinguished:
a) stocks (raw materials, components, semi-finished products and other similar values, animals for growing and fattening, costs in work in progress, finished products and goods for resale, goods shipped, deferred expenses, other stocks and costs);
b) accounts receivable - the amount of long-term and short-term debt in favor of the organization (financial obligations for settlements for goods, works, services, advances paid to other organizations and citizens, debts of subsidiaries and dependent companies, founders for contributions to the authorized (share) capital, etc.);
d) short-term financial investments - the amount of financial investments with a circulation period of up to one year (short-term loans to other organizations, short-term investments of the organization in government securities or bank deposits);
e) funds in the national and foreign currency at the cash desk and in bank accounts, other funds (in letters of credit, checkbooks, transfers in transit and monetary documents);
f) other types of current assets (not reflected in the above items).
3. By the nature of participation in the operational process:
a) current assets serving the production cycle of the enterprise (stocks of raw materials, materials and semi-finished products, work in progress, finished products);
b) current assets serving the financial (monetary) cycle of the organization (accounts receivable, etc.).
4. According to the period of functioning of current assets, there are:
a) a permanent part of current assets - the minimum minimum of current assets required by the enterprise to carry out operating activities;
b) the variable part of current assets, which is associated with a seasonal increase in sales, the need to form, in certain periods, inventories of seasonal storage, early delivery and intended purpose.
5. According to the degree of liquidity, current assets are distinguished:
a) absolutely liquid - ready-made means of payment (monetary assets in national and foreign currencies);
b) highly liquid - can be converted into cash in up to one month (short-term financial investments and short-term accounts receivable);
c) medium-liquid - can be converted into monetary form in a period of one to six months (all forms of receivables, except for short-term and hopeless ones, stocks of finished goods);
d) poorly liquid - can be converted into cash in a period of six months or more (raw materials, materials, semi-finished products and work in progress);
e) illiquid - cannot be sold independently, but only as part of an integral property complex (bad accounts receivable and prepaid expenses).
6. According to the degree of risk of capital investment, assets are distinguished:
a) with minimal investment risk (cash assets and short-term financial investments);
b) with a low risk of investments (accounts receivable except for bad; production stocks, except for stale; stocks of finished products and goods, minus those that are not in demand);
c) with an average risk of investments (work in progress minus the excess, future expenses);
d) with a high risk of investments (bad accounts receivable, stale production stocks, excess work in progress, stocks of finished goods and goods that are not in demand).
Classification of working capital according to the degree of their liquidity and degree financial risk characterizes the quality of funds of consumer cooperation organizations in circulation. The task of such a classification is to identify those current assets, the possibility of which is unlikely to be sold. The liquidity of current assets is the main factor that determines the degree of risk of capital investment in current assets. The accumulated assessments of the realizability of certain types of assets over a long period allow us to determine the probability of the risk of investments in these assets. Grouping current assets according to the degree of risk allows you to control the rational allocation of capital in current assets.
7. Depending on the standards of accounting and reflection in the balance sheet of the organization, the following groups are distinguished:
a) stocks (raw materials, materials and other similar values, costs in work in progress, finished goods and goods for resale, prepaid expenses, other stocks and costs, VAT on purchased values);
b) accounts receivable / funds in settlements / (goods shipped, settlements with debtors for goods and services, settlements with subsidiaries, settlements with other debtors, advances issued to suppliers and contractors, other current assets);
c) cash (short-term financial investments, cash on hand, on current and foreign currency accounts, other cash).
The structure of current assets is understood as the ratio between the elements in their total amount. The structure of current assets is largely determined by the industry affiliation of organizations. Direct link between current assets and accounts payable no, however, it is believed that a normally operating enterprise should have current assets greater than current liabilities.
Answer: Current assets provide continuity circulation of capital. Current assets- a set of funds advanced for the creation of circulating production assets and circulation funds, ensuring their continuous circulation. Revolving funds include: Items of labor (raw materials, materials, etc.);
Labor tools with a service life of no more than 1 year; Work in progress and prepaid expenses. In its movement, current assets go through three successive stages of circulation: monetary, productive and commodity. First stage the circulation of circulating assets - monetary... At this stage, the transformation of funds into a form occurs. production stocks. Second stage - productive... At this stage, the cost of the created products continues to be advanced, but not completely, but in the amount of used production stocks; the costs of wages, as well as the transferred part of fixed assets. On the third stage the circulation continues to advance the product of labor (finished goods). Only after commodity form the newly created value will turn into cash, the advanced funds are restored due to part of the proceeds received from the sale of products. Standard current assets sets their minimum estimated amount, constantly necessary for the enterprise to work. Composition and classification of working capital:
Current (current, mobile) assets are shown in second section of asset balance... Their analysis should start with grouping these assets according to their degree of liquidity, i.e. feasibility. For this, certain types of current assets must be divided into the following groups: the most easily realizable assets with a minimum degree of risk in terms of their liquidity. These include cash and easily traded (quick traded) short-term securities; easily realizable assets with a low degree of risk. This includes: accounts receivable from organizations with sustainable financial condition , stocks of material resources (with the exception of stale, not used in production for a long time), as well as finished products of mass consumption that are in demand; current assets with an average degree of realizability, or an average degree of risk. This can include work in progress, deferred expenses, as well as finished products for industrial and technical purposes; hard-to-sell (low-liquid) circulating assets with a high degree of risk during their sale. This group includes accounts receivable of organizations with an unstable financial condition, stale stocks of material resources, stocks of finished goods that are not in demand by buyers. When analyzing, it is necessary to assess the dynamics of the ratio of hard-to-sell assets and the total value of current assets, as well as hard-to-sell and easy-to-sell current assets. If these ratios increase, then this indicates a decrease in liquidity, i.e. the more funds are invested in current assets in the high-risk group, the lower the liquidity of the organization. It should be noted that such an item of the balance sheet as value added tax on acquired values is not included in the composition of current assets, grouped according to their degree of liquidity, since this item cannot give the organization real cash. After studying the liquidity of current assets, one should proceed to consider the validity of the amounts of inventories (inventories). Organizations develop standards for stocks by their types. The compliance of the actual stocks of current assets with the standards has a significant impact on the financial condition of the organization, which is revealed during internal analysis. The excess of the actual stocks (balances) over the standards is called the excess stocks (balances). If the actual stocks are less than the standards, then this is usually called the non-filling of the standard. In the process of analysis, it is necessary to identify for which specific types of reserves there are excess amounts, what are the reasons for their formation, and also outline measures to eliminate them. In an internal analysis, it is necessary to identify the reasons for the organization's excess stocks. Such reasons may be: I. By production stocks: Uneven, early and incomplete supply of raw materials, materials, purchased semi-finished products, fuel, as well as their import according to transit rates significantly exceeding the need for this overestimation of the consumption of materials per unit of production, as well as incomplete accounting stocks of materials in the warehouse in the process of planning the logistics of the organization; Saving material costs; Failure to comply with the business plan for the production of products; Increase in the cost (increase) of the procurement cost of materials in comparison with the planned; Seasonal delivery of raw materials, etc. causes.
II. Incomplete production and semi-finished products of our own production: Incomplete parts, assemblies, semi-finished products; Overfulfillment of the plan for gross production; Creation of backlog of work in progress for additional and orders not provided for by the annual production plan; Changes in production plans for individual products and the timing of orders, resulting in backlog and costs for canceled orders and discontinued products; The increase in the cost of the actual cost of work in progress compared to its planned cost; Deficiencies in WIP accounting. III. For finished products: Irregularity of production; Overfulfillment of the plan for the release of marketable products; Incomplete provision of the volume of products with sales contracts; Low quality product release; Over-planned production of products in limited demand; Lack of packaging and Vehicle for the shipment of products; Termination of shipment of products to insolvent buyers or transferring them to prepayment for products; The excess of the actual cost of the finished product over its planned cost. To deepen the internal analysis, you should study the composition of materials by their types, grades and profiles. A similar detailed analysis should also be carried out for work in progress and finished goods. When analyzing reserves, in addition to absolute, are used and relative indicators for example, stock in days (remaining in stock days). These indicators express the dependence of the size of stocks on changes in the volume of production. Stocks in days are calculated for certain types of stocks as the ratio of their remainder to their daily turnover. One-day turnover expresses the transition of this type of stock to the next stage of the circuit and represents the turnover on the credit of the account where this type of stock is taken into account. So, the stocks in days will be determined as follows. Stock in days for raw materials, minus Remaining (stock) of raw materials and basic basic materials of materials divided by the one-day consumption of raw materials and basic materials by Similarly, stocks in days are determined for other types of production stocks (fuel, containers, spare parts, etc.) ... Inventory in days for work in progress is the remainder (backlog) of work in progress divided by the one-day release of marketable products at production cost. The stock in days for the finished product is the balance of the finished product divided by the one-day shipment of the product at the production cost. The analysis compares the actual stocks in days with the planned ones; this comparison shows what the deviation of the actual stocks from the standards is, taking into account the actual demand for these stocks. After examining the state of stocks, let's move on to the analysis of cash, also included in current assets. In the definition of sales proceeds as shipped, there are discrepancies between the amount of cash and the profit received. Cash flow analysis provides an opportunity to explain the reasons for these discrepancies. The analysis uses two methods - direct and indirect. With the direct method, the inflow and outflow of funds is determined; the initial element is sales proceeds. In the indirect approach, the original element is profit, which is adjusted for cash flows. Consider the entity direct method... As for the main activity of the organization, the amount of cash from its implementation is determined as the difference between the receipt of proceeds from the sale of products, works, services and the expenditure of funds associated with the costs of production and sale of products. In the process investment activities receipt of funds from the sale of fixed assets, intangible assets long-term valuable papers reduced by the amount of money spent on the purchase of fixed assets, intangible assets and long-term securities. The amount of funds from financial activities organization is defined as the difference between the receipt of proceeds from the sale of its shares, receipt of loans and borrowings and the disposal of funds as a result of dividend payments to shareholders and repayment of loans and borrowings. The amount of cash from other activities is calculated in the same way. The total amount of the organization's funds is determined as the amount of these funds from different types activities. The direct method makes it possible to characterize the liquidity of the organization, since it depicts in detail the movement of funds in its accounts. At the same time, this method does not show the relationship between the obtained financial result (profit) and the change in the amount of cash. The indirect method of analysis allows explaining the reasons for the discrepancy between the profit received for a given period and the amount of funds. An organization can also have types of income and expenses that affect profits, but do not change the amount of cash. When analyzed by the amount of these incomes and expenses, the net profit of the organization is adjusted. So, the disposal of fixed assets can bring a loss in the amount residual value these assets. As a result of this operation, the amount of funds does not change; the incompletely amortized cost of property, plant and equipment should be added to net profit... The accrual of depreciation by the organization also does not cause a change in the amount of cash. In addition, when accounting for the sale of products at the time of their shipment, the organization receives financial results(profit) before the actual receipt of funds. When analyzing, you should recalculate (adjust) the indicators of those accounts that affect the amount of profit. An increase in active accounts is attributed to a decrease in the amount of profit, and a decrease in an increase in the amount of profit. For example, if in the reporting period there was an increase in accounts receivable from buyers and customers, then the actual amount of cash decreases. Decrease in receivables, on the contrary, increases the amount of cash. Therefore, in the first case, the profit should be reduced, and in the second, it should be increased. Transactions carried out on passive accounts affect cash in the opposite way. So, for example, the amount of depreciation (depreciation) of fixed assets, intangible assets, which do not affect the amount of cash, must be added to the amount of net profit. As a result of the posting in the warehouse of the organization of the materials remaining after the liquidation of fixed assets, profit increases, but since this operation does not cause cash flow, then its amount should be attributed to a decrease in net profit.
