Enterprise working capital management. Management of working capital of an enterprise using the example of Raduga-Service LLC

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Control working capital- This is an integral part of the management of the entire enterprise. The main goal of enterprise management is to improve financial condition enterprises (achieving maximum profits and increasing the value of the company).

The same goal is pursued when managing working capital.

To manage working capital at the enterprise, a special group must be created, consisting of specialists working in various functional departments (planning department, accounting department, supply and sales department, technical department etc.), with the assignment of responsibilities for analyzing the use of working capital and developing management decisions in order to minimize them. The work of this special group should be ongoing, i.e. it should systematically monitor the situation with the availability and level of use revolving funds and circulating funds at the enterprise. Each member of this special group (based on his specific work at the enterprise) must be assigned a certain area of work.

If, for example, one of the members of this commission works in the department of norms and regulations, then this employee should be responsible for this area of work. The general coordinator for the activities of the special group is its leader, who in turn must report to the deputy director for finance or other official.

Working capital management should be carried out both as a whole and by its individual elements (inventory, work in progress, finished products in warehouses, accounts receivable, cash and cash equivalents, etc.), since any element of working capital has its own economic purpose and features that must be taken into account when managing each of them.

Let's take a closer look at these features.

Productive reserves. In a financial management system, this object is understood in a broader aspect than just the raw materials and supplies necessary for the production process. It also includes work in progress, finished goods, goods for resale, etc. For financial managers and analysts, the material nature of inventories does not have special significance; What is important is only the total amount of money “dead” in inventories during the technological (production) cycle; that is why it is possible to combine these seemingly disparate assets into one group.

Inventory management has great value both in technological and financial aspects. From the position of financial management of an enterprise, inventories are immobilized funds, i.e. funds, in a certain sense, diverted from circulation. It is clear that such forced immobilization cannot be avoided, but it is quite natural to want to minimize the indirect losses caused by this process, which, with a certain degree of convention, are numerically equal to the income that could be received by investing the corresponding amount in some alternative project (for example, the alternative to “death”) » funds in reserves is the placement of some of them in a bank at interest or the acquisition of marketable securities). By the way, these indirect losses under certain circumstances can become direct. Research shows that in the event of a forced sale of assets, for example in the event of a company’s bankruptcy, many current assets “suddenly” fall into the category of illiquid assets, and the proceeds for them may be much lower than the book value.

Formalizing an inventory management policy requires answering the following questions:

a) is it possible, in principle, to optimize the inventory management policy;

b) what volume of reserves is the minimum required;

c) when the next batch of supplies should be ordered;

d) what should be the optimal volume of the ordered batch.

The answers to all these questions are given in the theory of inventory management. In particular, it is shown that under certain restrictions and prerequisites it is possible to calculate the size of the optimal order quantity (Economic Order Quantity, EOQ); the corresponding formula is:

where EO() is the volume of the batch in units;

F is the cost of fulfilling one batch of the order;

D is the total need for raw materials for the period, units;

N - storage costs per unit of raw materials.

Accounts receivable. Unlike inventories and work in progress, which are quite static and cannot be changed dramatically, since they are largely determined by the essence of the technological process, accounts receivable is a very variable and dynamic element of working capital, significantly dependent on the company’s policy towards customers products. Since accounts receivable represents the immobilization of its own working capital, i.e., in principle, it is unprofitable for the enterprise, the conclusion obviously suggests itself about its maximum possible reduction. Theoretically, accounts receivable can be reduced to a minimum, however, this does not happen for many reasons, including competition.

From the point of view of reimbursement of the cost of the supplied products, the sale can be carried out in one of three ways:

a) prepayment (the goods are paid for in full or in part before they are handed over by the seller);

b) payment for cash (the goods are paid in full at the time of delivery of the goods, i.e.

E. there is an exchange of goods for money);

c) payment on credit (the goods are paid for a certain time after they are transferred to the buyer). In a market economy, it is the latter method that is the main one and is usually carried out in the form of non-cash payments, the main forms of which are payment order, letter of credit, collection payments and settlement check. The last scheme is the most disadvantageous for the seller, since he has to credit the buyer, but it is the main one in the payment system for delivered products. When paying with deferred payment, receivables for commodity transactions arise as a natural element of such a generally accepted payment system.

When developing a policy for lending to buyers of its products, an enterprise must decide on the following key issues:

loan period (most often, a company has several standard agreements that provide for a deadline for payment for products);

creditworthiness standards (criteria by which the supplier determines the financial solvency of the buyer and the resulting possible options payment);

system for creating reserves for doubtful debts (it is assumed that, no matter how well the system of working with debtors is, there is always a risk of non-receipt of payment, at least due to force majeure circumstances; therefore, based on the principle of caution, it is necessary to create a reserve for losses due to insolvency in advance buyer);

payment collection system (this includes procedures for interaction with customers in case of violation of payment terms, a set of criterion values of indicators indicating the significance of payment violations, a system for punishing unscrupulous counterparties, etc.); system of discounts provided (in a market economy, it is common practice to provide discounts in the event of an agreed and sufficient short period payment for delivered products).

An effective system for establishing relationships with customers implies:

a) high-quality selection of clients to whom loans can be provided;

b) definition optimal conditions lending;

c) a clear procedure for filing claims;

d) monitoring how clients fulfill the terms of contracts.

No matter how effective the buyer selection system is, during

interaction with them does not exclude all sorts of problems, so the company is forced to organize some kind of control system over the compliance of customers with payment discipline. This system, called the customer relationship administration system, implies:

a) regular monitoring of debtors by type of product, volume of debt, repayment terms, etc.;

b) minimizing time intervals between the moments of completion of work, shipment of products, presentation of payment documents;

c) sending payment documents to the appropriate addresses;

d) careful consideration of customer requests regarding payment terms;

e) a clear procedure for paying bills and receiving payments.

Cash. In a market economy, the importance of cash and cash equivalents is determined by the following reasons: routine (the need to provide cash for current operations), precaution (the need to repay unexpected payments), speculativeness (the opportunity to participate in a previously unforeseen profitable project). An effective cash management system involves the identification of four large blocks of procedures that require certain attention of the financial manager:

a) calculation of the financial cycle;

b) cash flow analysis;

c) cash flow forecasting;

d) determining the optimal level of funds.

Working capital management involves managing

them both in the sphere of production and circulation. When managing working capital (production area), it is necessary to pay attention to the state of affairs at the enterprise in the following areas:

dynamics of consumption of material and fuel and energy resources per unit of production;

system for improving the regulatory framework at the enterprise;

a system of progressiveness of the equipment and technology used at the enterprise;

1.2 Sources of formation of working capital of enterprises.................... 11

1.3 Working capital management model.................................................... 13

1.4 Calculation and assessment of the main indicators of working capital................... 27

1.5 Calculation and assessment of the efficiency of using working capital... 30

Chapter 2 Diagnostics of working capital management indicators of the enterprise Mebel-Pro LLC.................................................... ........................................................ .......... 34

2.1 Calculation of indicators for managing the acceleration of working capital................... 34

2.2 Analysis of the dynamics of working capital acceleration management indicators 41

Conclusion................................................. ........................................................ .. 49

List of sources and literature used.................................................... 51

Introduction

Current assets make up a significant share of all assets of the enterprise. The successful entrepreneurial activity of an economic entity largely depends on their skillful management. Management of current assets occupies a special place in the work of a financial manager, since it is a constant, daily and continuous process. The development of market relations determines new conditions for their organization. High inflation, non-payments and other crisis phenomena inherent in Russian economy, force enterprises to change their policy in relation to working capital, look for new sources of replenishment, and study the problem of the efficiency of their use.

As with other management objects that fall within the sphere of interests of a financial manager, we are not talking about the material composition of current assets, but about the policy of optimal management of investments in these assets. An understatement of the amount of working capital entails an unstable financial condition, interruptions in production process and, as a consequence, a decrease in production and profits. In turn, overestimating the size of working capital reduces the enterprise’s ability to make capital expenditures to expand production. Freezing funds (own and borrowed) in any form, be it warehouse stocks of finished products or suspended production, excess raw materials and materials, is very expensive for the enterprise, since free cash can be used more rationally to generate additional income.

At an enterprise, determining the need for working capital must be linked to the cost estimate for production and production plan enterprises. It should justify the release of specific types of products in the right quantity and within a certain time frame.

Despite the instability of economic relations, the unreliability of suppliers, the difficulties of acquiring high-quality raw materials and components, the production plan must address issues on which the provision of production and the need for working capital depend. Tasks are greatly simplified if strong business ties have already been established with suppliers. And, as a result, the conditions, frequency of supplies of inventory items, and their payment will be easy to take into account when calculating the need for working capital.

Simultaneously with determining the range of suppliers, a complete list of types of raw materials, basic and auxiliary materials, fuel, MBP, spare parts and others is compiled.

The final part of the production plan reflects possible production costs for the production of products, which in total determine the production cost of the product. It is the value of production costs that underlies the determination of the need for working capital.

The relevance of this topic is due to the fact that the optimization and state of working capital is directly related to the effective operation of the enterprise and whether the enterprise will make a profit. In order to effectively manage current assets, you need to consider them as a whole and, most importantly, in the context of individual items.

The purpose of this course work is to develop specific proposals for improving the use of working capital in the enterprise.

The objectives of this course work are: consideration of the structure, composition and dynamics of working capital at the enterprise; defining them optimal size and needs; determination of optimal methods for analyzing working capital; finding the most profitable way to use them; identifying the relationship between working capital profits and cash flow.

The object of study for this course work was a specific commercial enterprise, Furniture-Pro LLC, which is engaged in the production and distribution of household goods (furniture, household goods, repair products, etc.).

The subject of the work is the study of the methodology for managing working capital of an enterprise and indicators (methods of analysis) of working capital turnover.

The information base is accounting documents and reports commercial enterprise Furniture-Pro LLC and articles taken from the Financial Director magazine. Information was also found on Internet sites; www1.minfin.ru; ;

The methodological basis of the course work is the works of Sheremet A.D., Saifulin R.S. and Kolchina N.V. and other authors.

Chapter 1 Working capital management of enterprises

1.1 Working capital of the enterprise. Their composition and structure. Circulation of working capital

Any organization conducting production or commercial activities must have certain real, that is, functioning property or active capital in the form of fixed and working capital.

Working capital should be understood as a balance sheet asset that reveals the subject composition of the enterprise’s property, in particular its current or current assets (material current assets, accounts receivable, free cash), and working capital is a balance sheet liability showing what amount of funds (capital) invested in the economic activities of the enterprise (equity and borrowed capital). Working capital is the funds that support the process economic activity, participating simultaneously in the production process and in the process of product sales.

Or: working capital is assets that are used once in the production process and change their physical form. Their cost is fully included in the cost of products made from them and services provided.

Working capital, according to its role in the process of production and circulation, is divided into circulating production assets and circulation funds.

Working production assets serve the production sector. They materialize in objects of labor (raw materials, materials, fuel, etc.), are embodied in production inventories, work in progress, and semi-finished products of their own making. Along with these elements, there are also deferred expenses necessary for the installation of new equipment, etc.

Production assets are the material basis of production; they serve the sphere of production, completely transfer their value to the newly created product, and at the same time change their original form.

Circulation funds do not directly participate in the production process; their purpose is to provide resources for the circulation process.

Circulation funds consist of finished products and cash.

The unification of working production assets and circulation funds into a single category - working capital - is due to the fact that: firstly, the reproduction process is the unity of the production process and the process of selling products. Elements of working capital continuously move from the sphere of production to the sphere of circulation and return to production again. Secondly, the elements of circulating funds and circulation funds have the same nature of movement, circulation, constituting a continuous process.

Let's consider the composition of working capital.

a) Inventories – actual cost stocks of raw materials, materials, purchased semi-finished products, components, fuel, spare parts, containers and other material assets.

b) Work in progress - products that have not gone through all stages of processing provided for technological process, as well as incomplete products that have not passed testing and technical acceptance.

c) Deferred expenses - costs for the development of new products, fees for subscription publications, payment of rent in advance, etc. These expenses are written off against the cost of production in future periods.

d) Finished products – the actual production cost of finished products intended for sale to customers.

e) Goods – the value of remaining goods intended for sale.

f) Goods shipped - data on the movement of shipped products (goods), in which the supply agreement provides for a moment of ownership that differs from the general procedure.

g) Accounts receivable is a complex item that includes settlements: with buyers and customers, with participants for contributions to the authorized capital, for advances issued, with other debtors.

h) Short-term financial investments – short-term financial investments (for a period of no more than 1 year) in own shares purchased from shareholders.

i) Cash – funds in accounts with credit and banking institutions, in securities, in the cash register of an enterprise.

Totality components of the enterprise's working capital presented in the form of shares and percentages will reflect the structure of working capital.

As the authors write, Sheremet A.D. and Saifulin R.S. According to the degree of controllability, working capital is divided into standardized and non-standardized. Standardized funds include all circulating production assets, as well as that part of the circulating assets that is in the form of remnants of unsold finished products.

Non-rationed funds include the remaining elements of circulation funds, that is, products sent to consumers but not yet paid for and all types of funds and settlements. The absence of standards does not mean, however, that the size of these elements of working capital can change arbitrarily and indefinitely and that there is no control over them.

The composition of working capital can be considered from the perspective of their liquidity (see Table 1).

The most liquid funds are the amounts for all cash items that can be used to carry out current payments immediately.

Table 1

Composition and structure of working capital by degree of liquidity

Working capital group	Balance sheet asset items
1. The most liquid assets	1. Cash: cash desk, current accounts, foreign currency accounts, special bank accounts 2. Short-term financial investments
2. Quickly marketable assets	1. Goods shipped 2. Accounts receivable: for goods, works, services, with the budget, with personnel for other operations, with other debtors 3. Other current assets
3. Slow-moving assets	1. Inventories - the result of section 2 of the balance sheet asset minus deferred expenses and VAT on acquired values
Total: total amount of working capital	Point 1 + point 2 + point 3

Slowly sold working capital are semi-finished products, work in progress, stale goods in warehouses, and doubtful debts.

Circulation of working capital

Being in constant motion, working capital makes a continuous circuit, which is reflected in the constant renewal of the production process.

The movement of working capital can be presented in the form:

D – T …- T – P – T "… - T " – D "

The circulation of capital covers 3 stages: procurement (purchases), production and sales.

At the first stage (D-T), working capital moves from the form of cash into production (objects of labor, goods).

The second stage (T-P-T ") takes place in the production process. It consists of the transfer into production (P) of purchased material assets, inventory. At this stage, production value turns into commodity value, and material composition from production inventories it first turns into unfinished products, and then into finished products (PZ-P-GP).

The third stage (T "- D") (sales) - consists of selling manufactured products and receiving funds. At this stage, working capital moves from the production stage to the circulation stage and again takes the form of cash. The difference between D " and D is the amount of cash income or financial results economic activity. The monetary form that working capital takes at the final stage of the circulation is at the same time the initial stage of capital turnover.

The cycle continues constantly, and after its completion a new one begins. The period of turnover of inventories from the moment they enter production, work in progress and finished goods until the moment they are shipped form the production cycle. The financial cycle covers the processes of production and sales of products. It starts with paying for raw materials and supplies and ends with receiving money from buyers.

Thus, we can conclude that the working capital of an enterprise consists of circulating production assets that serve the production sector; and circulation funds, the purpose of which is to provide resources for the circulation process. Working capital carries out a continuous circulation, starting from the stage of purchasing materials for production and ending with the stage of sales of goods.

1.2. Sources of formation of working capital of enterprises

In the process of circulation of working capital, the sources of their formation, as a rule, do not differ. However, the system for the formation of working capital affects the speed of turnover and the efficiency of using working capital. Excess working capital will mean that part of the company's capital is idle and does not generate income. A lack of working capital will slow down the production process, slowing down the rate of economic turnover of the enterprise's assets.

Let's consider the sources of working capital formation:

Own sources (information is presented in the main section 3 of the liabilities side of the enterprise’s balance sheet).

Borrowed sources (information is presented in sections 4, 5 of the balance sheet liabilities, as well as in sections 1, 2 of form No. 5 of the appendix to the annual balance sheet).

Additional sources involved

Appendix No. 3 provides the composition and structure of sources for the formation of working capital.

Own working capital plays an important role in organizing the circulation of enterprise funds; it determines the financial stability of the enterprise. Initially, its formation is carried out at the time of creation of the enterprise. It is provided with fixed and working capital necessary for commercial activities in the amounts determined by the constituent documents. For these purposes, authorized capital is formed at unitary and federal government enterprises.

Part of the funds invested by the founders is used to purchase inventories intended for manufacturing products, performing work, and purchasing goods.

In the future, the replenishment of working capital can be carried out from its own sources received by the enterprise in the course of its activities, mainly from the profit received.

In addition to profit, as its own source of replenishment of working capital, the enterprise has funds equivalent to its own. These are stable liabilities that do not belong to the enterprise, but are constantly in circulation. The enterprise uses them without seeking special additional sources to finance business activities.

Stable liabilities include:

Minimum carryover payables, which is due to the natural discrepancy between the accrual period and the payment date wages, transfer of mandatory payments;

Debt to suppliers for uninvoiced deliveries and accepted payment documents, the payment period for which has not yet arrived;

Debt to buyers and customers for advances and partial payment (prepayment) for products, goods, works, services;

Debt to the budget for certain types of taxes, which are accrued ahead of schedule payment.

The amount of stable liabilities may change upward or downward. This source of funds is essentially planned accounts payable.

In conditions of complete economic independence, the enterprise’s turnover may include other own funds. These are temporarily unused balances of reserve capital and other funds created at the enterprise.

In addition to its own resources, in the turnover of an enterprise, borrowed funds can be used, the basis of which is short-term loans from banks and other creditors.

Among the funds attracted by an enterprise into economic circulation is accounts payable, which is essentially a free loan provided by other enterprises. Unlike stable liabilities, accounts payable are not a planned source of working capital. Often debt is natural, as it arises due to the peculiarities of settlements. However, in most cases, accounts payable arises as a result of violation of settlement and payment discipline and is a consequence of the enterprise’s failure to comply with payment terms for products.

Thus, the sources of working capital formation are: own sources, borrowed sources and additionally attracted sources. The most important of these are own sources, namely earned profits and sustainable liabilities. Borrowed funds are also an important element in the process of forming working capital of an enterprise.

1.3. Working capital management model

Working capital management is the most extensive part of financial management in the entire system of managing the use of enterprise capital. This is due to the existence large quantity elements of the asset formed through working capital, required by individualization of management. The importance is also manifested by the high dynamics of transformation of types of working capital; high role in ensuring solvency, profitability and other target results financial activities enterprises.

There is a specially developed list of working capital management stages.

Stage I. First of all, it is necessary to analyze the use of working capital in the operating process of the enterprise in the previous period. To do this, we consider the dynamics of the total volume of working capital, the dynamics of the composition of the enterprise’s current assets formed at the expense of working capital. Analysis of the composition of an enterprise's current assets by individual types allows us to assess the level of their liquidity.

The results make it possible to determine the overall level of efficiency of working capital management of the enterprise and identify the main directions for its increase in the coming period.

Stage II. At the next stage, the fundamental approaches to the formation of current assets at the expense of the operating capital of the enterprise are determined. The theory of financial management considers three fundamental approaches to the formation of current assets of an enterprise:

1) Conservative approach - involves the creation of large working capital reserves in case of unforeseen difficulties in providing the enterprise with raw materials, deterioration of production conditions, delays in collection of receivables, etc.;

2) Moderate - aimed at ensuring full satisfaction of the current need for all types of current assets and creating their normalized insurance amounts;

3) Aggressive - consists of minimizing all forms of insurance reserves for certain types of these assets.

Ultimately, all these approaches determine the amount of this capital and the level of its capital intensity in relation to the volume of operating activities.

At stage III, the volume of working capital is optimized. Such optimization should proceed from the chosen type of policy for the formation of current assets, ensuring a given level of efficiency and risk ratio of the use of working capital.

Optimization of the ratio of the constant and variable parts of working capital used in the operating process belongs to stage IV. This is the basis for managing its turnover during use.

V stage. The necessary liquidity of the assets used, formed at the expense of working capital, is ensured.

At the final stage (stage VI), an increase in the profitability of working capital is ensured. Its size should generate a certain profit when it is used in production and marketing activities.

An integral part of the working capital management process is to ensure the timely use of the temporarily free balance of monetary assets to form an effective portfolio of short-term financial investments. The goals and nature of management of certain types of current assets formed at the expense of operating capital have their own distinctive features.

Therefore, at an enterprise with a large amount of working capital used, an independent policy for managing certain types of working capital (inventories of goods and materials, accounts receivable and monetary assets) is being developed.

To study the problem in more detail, it is necessary to consider the features of management models for certain types of current assets.

a) Inventory management model.

Managing inventories necessary for the production process (inventory, work in progress, deferred expenses and finished goods) means determining the need for these inventories to ensure an uninterrupted production process and the implementation of the firm's specific needs for financial resources to create specific types of inventories and rationing.

There are various economic and mathematical models of inventory management. IN general view they can be divided into four groups: deterministic, stochastic, statistical and dynamic models.

Deterministic models include parameters that are set quite precisely. These are costs, prices, need for materials, warehouse costs, etc. The model expresses the dependence of the batch size on the ratio of well-defined elements.

The class of stochastic models includes those in which the need is an uncertain, probabilistic quantity. In such models, demand changes at the beginning of each given period and the distribution of demand across periods is independent.

In the stochastic model, not one period can be considered, but several, with purchases made at the beginning of each of them. The task is to determine the batch size, that is, the quantity of goods purchased in each period. This value depends on the level of inventory of a given product at the beginning of each period.

With a static model, the choice of the optimal strategy is not a determining condition for inventory management. For mass flows of material assets of low value, it is usually possible to limit oneself to approximate calculations, which allows the use of static models. If the size of the inventory at the beginning of the first period is a certain value, then, due to the presence of random demand, the size of the inventory at the beginning of subsequent periods forms a sequence of random variables X1, X2, etc., since it is assumed that the distribution of demand is uniform in all periods.

The above inventory management schemes are mostly applicable to solving problems related to mass flows of predominantly low-value goods. For expensive goods that have relatively little demand, more complex calculations are carried out. If with consumer goods there is no problem of purchasing and replenishing stocks, then with expensive goods the requested material may not be in the warehouse at the right time. Moreover, this product may be requested by several consumers. In these cases, a scarcity problem arises, which is solved using dynamic programming methods.

When using a dynamic model, the optimal replenishment strategy is determined if the following conditions are met: transport costs for moving from one stage to another are determined in proportion to the amount of material being moved; the costs of maintaining inventories and losses due to shortages, calculated for each enterprise during each individual period. They are a function of the amount of stock at a given stage.

An important indicator is the determination of the standard.

The working capital standard is the minimum required amount of funds to support business activities, which is determined taking into account the need for funds both for core activities and for major repairs. Rationing of working capital should ensure the optimal value of all constituent elements of current assets. It is known that the validity of the policy for the formation of inventory largely determines the financial position of the enterprise, primarily its liquidity and current solvency. Methods for rationing individual elements of industrial inventories are not the same.

The standard for stocks of raw materials (N), basic materials and purchased semi-finished products is calculated on the basis of their average daily consumption (P) and the average stock rate in days. The time spent in current (T), insurance (C), transport (M), technological (A) stocks, as well as in the preparation of stock necessary for unloading, delivery, acceptance and storage of materials (D) is also taken into account. Thus:

N = P * (T + C + M + A + D) (1)

In turn, the current stock is the main type of stock, therefore the rate of working capital in the current stock is the main determined value of the entire stock rate in days. Safety stock is necessary for each enterprise to guarantee the continuity of the production process in case of violation of delivery conditions and deadlines. Transport stock is created for the gap between the period of cargo turnover and document flow. Process inventory is created for a period of time to prepare materials for production, including time for analysis and laboratory testing.

The standardization of working capital in fuel reserves is established similarly to the standard for raw materials, materials and semi-finished products, i.e. based on the stock norm in days of one-day consumption. The standard for working capital in container stocks is determined depending on the sources of receipt and the method of use of the container.

Identifying surplus and scarce resources allows you to avoid unnecessary capital investments in materials for which the need is declining or cannot be determined.

The working capital standard for finished product balances is determined as the product of the working capital standard in days and the one-day output of marketable products in the coming year at production cost. The working capital norm for finished products is calculated separately for finished products in the warehouse and goods shipped for which payment documents have not been submitted to the bank for collection.

The rate of working capital for the stock of finished products in the warehouse is determined for the period of time necessary to complete and accumulate products until required sizes, for mandatory storage of products in a warehouse before shipment, for packaging and labeling of products, for their delivery to the departure and loading station.

With a large range of products, the main types of products are distinguished, constituting 70–80% of the total output. For these leading types of products, the weighted average working capital rate is calculated, which is then applied to all finished products in the warehouse.

Expenses in work in progress include all costs of manufactured products. They consist of the cost of unfinished products, semi-finished products of our own production, as well as finished products that have not yet been accepted by the technical control department.

The amount of the working capital standard allocated for work in progress depends on four factors: the volume and composition of products produced, duration production cycle, production costs and the nature of the increase in costs during the production process. Rationing in work in progress is carried out according to the formula:

where K is the coefficient of increase in costs in production.

The product of the average duration of the production cycle (T) and the cost increase coefficient (K) forms the rate of working capital in work in progress in days. Consequently, the standard of working capital in work in progress will be the result of the product of the standard of working capital and the amount of one-day production.

Unlike work in progress, deferred expenses are written off against the cost of production in subsequent periods. These include costs for developing new types of products, improving production technology, costs for subscriptions to periodicals, rent, etc.

The working capital standard for deferred expenses (N) is determined by the formula:

where P is the carryover amount of deferred expenses at the beginning of the coming year;

P – deferred expenses in the coming year, provided for in the relevant estimates;

C – deferred expenses to be written off against the cost of production in the coming year in accordance with the production estimate.

If, in the process of preparing, developing and manufacturing new types of products, a company uses a targeted bank loan, then when calculating the working capital standard in expenses of future periods, the amounts of bank loans are excluded.

Such a detailed consideration of inventory management models with the help of norms and regulations helps to minimize the cost of maintaining inventories, reducing their surplus, and consequently freeing up cash and accelerating the turnover of the company's working capital.

b) Accounts receivable management model.

Funds in accounts receivable indicate a temporary diversion of funds from the company’s turnover, which causes an additional need for resources and can lead to a tense financial situation. Accounts receivable may be eligible, i.e. due to the current payment system, and unacceptable, indicating shortcomings in financial and economic activities.

Let's look at the item shipped goods. The funds in it make up a significant share of all accounts receivable at companies producing products. They are formed inevitably, since finished products located in the warehouse are shipped to consumers within the established contractual deadlines.

To manage accounts receivable for companies in Russian economic conditions The following techniques can be used.

1. Exclusion of debtors with a high level of risk from the number of partners of the enterprise. This admission measure is intended both for developed market relations and for the period of formation and development of the market. It should be noted that in the latter case, this method is especially effective.

2. Periodic review of the maximum loan amount. Determining the maximum amount of loans provided should be based on the financial capabilities of the enterprise, the projected number of loan recipients and an assessment of the level of credit risk. The fixed maximum limit on the amount of debt can be differentiated among groups of future debtors, based on the financial condition of individual clients.

3. Using the possibility of paying receivables with bills of exchange and securities. Because waiting for payment in real money can be much more expensive.

4. Formation of principles for the implementation of settlements between the company and contractors for the coming period. When developing acceptable forms of payment, it should be taken into account that when purchasing products, the most effective are settlements using bills of exchange, and when selling products, settlements using a letter of credit.

5. Identification of financial opportunities for the company to provide commodity (commercial) or consumer credit.

6. Determination of the possible amount of current assets diverted into accounts receivable for trade and consumer loans, as well as for advances issued.

7. Formation of conditions for ensuring the collection of receivables. In the process of forming these conditions, the company must define a system of measures to guarantee the receipt of debt. Such measures include: processing a trade loan using a secured bill of exchange; requirement for debtors to insure loans provided for a long period, etc.

8. Formation of a system of penalties for late fulfillment of obligations by counterparties - debtors.

9. Determination of the procedure for collecting receivables. This procedure should provide for the timing and form of preliminary and subsequent reminders from the counterparty to the debtors about the payment date, the possibility of prolonging the debt, the period and procedure for debt collection and other actions.

When assessing the total debt of an enterprise to its counterparties, one should not lose sight of cases of hidden receivables that arise when the enterprise settles with suppliers on prepayment terms.

c) Cash management model.

Management of monetary assets or cash balances is constantly at the disposal of the enterprise and forms an integral part of the functions general use working capital. The size of the balance of monetary assets that an enterprise operates determines the level of its absolute solvency, affects the duration of the operating cycle, and also characterizes, to a certain extent, the investment potential of the enterprise making short-term financial investments at the expense of working capital.

The main goal of financial management in the process of managing monetary assets is to ensure the constant solvency of the enterprise. In this, the function of monetary assets as a means of payment is realized, ensuring the implementation of the goals of forming their operating, insurance and compensation balances. The priority of this goal is determined by the fact that neither the large size of current assets and equity capital, nor high level profitability of economic activities cannot insure an enterprise against the initiation of a bankruptcy claim against it if, within the stipulated time frame, due to a lack of monetary assets, it cannot pay off its urgent financial obligations. Therefore, in the practice of financial management, the management of monetary assets as part of working capital is often identified with the management of solvency.

Along with this main goal, an important task in the process of managing monetary assets is to ensure the effective use of temporarily free funds, as well as the formed investment balance.

Taking into account the main goal of using working capital in the process of managing monetary assets, an appropriate financial policy. In the process of its formation, it should be taken into account that the requirements for ensuring the constant solvency of the enterprise determine the need to create a high asset of monetary assets, i.e. pursues the goal of maximizing their average balance within the financial capabilities of the enterprise. On the other hand, when storing monetary assets in national currency, they are significantly susceptible to loss of real value from inflation, which determines the need to minimize their average balance.

The monetary asset management model consists of the following stages. The first stage allows you to assess the state of the average balance of monetary assets from the standpoint of ensuring the solvency of the enterprise, as well as determining the efficiency of their use:

The degree of participation of monetary assets in working capital and its dynamics in the previous period are assessed;

The average turnover period for assets in the period under review is determined, which makes it possible to characterize the role of monetary assets in the total duration of the operating cycle;

The level of absolute solvency of the enterprise is determined for individual months of the previous period;

The level of diversion of the free balance of monetary assets into short-term financial investments is determined.

Second stage: calculations are made of the required size of individual types of this balance in the previous period:

The need for the operating balance of monetary assets is determined, which characterizes minimum amount necessary for carrying out economic activities;

The need for the insurance balance is determined based on the calculated amount of the operating balance and the coefficient of unevenness of cash flows to the enterprise for individual months of the previous period;

The need for a compensating balance of monetary assets is determined in the amount determined by the banking service agreement;

The need for the investment balance is determined based on financial capabilities.

The third stage is carried out only at those enterprises that conduct foreign economic activity. It consists of separating the currency part from the overall optimized need for monetary assets in order to ensure the formation of the currency fund necessary for the enterprise.

The fourth stage is carried out in order to ensure the constant solvency of the enterprise, as well as to reduce the average need for balances of monetary assets. The main method of regulating the average balances of monetary assets is to adjust the flow of upcoming payments:

The range of fluctuations in the balance in the context of individual decades is studied;

Ten-day terms of cash expenditures are regulated, which allows minimizing the balance of monetary assets within each month and for the quarter as a whole;

The results obtained are optimized taking into account the expected size of the insurance balance of these assets;

Reducing cash payments;

Acceleration of collection of receivables occurs:

Open a “credit line” at the bank;

The collection of received cash is being accelerated.

Fifth stage: a system of measures is being developed to minimize the level of losses of alternative income during storage and anti-inflation protection.

At the final stage, the total level of the balance of monetary assets ensuring the current solvency of the enterprise is monitored.

The control system for monetary assets must be integrated into the overall system for controlling the use of capital of the enterprise.

Let's also consider the following general methods of working capital management:

1) Analytical method;

2) Coefficient method;

3) Direct counting method.

The analytical method involves determining the need for working capital in the amount of their average actual balances, taking into account the growth of production volumes. In order not to record shortcomings of past periods in the organization of working capital, it is necessary to analyze the actual balances of production inventories in order to identify unnecessary, redundant, illiquid, as well as all stages of work in progress to identify reserves for reducing the duration of the production cycle. Study the reasons for the accumulation of finished products in the warehouse and determine the actual need for working capital. In this case, it is necessary to take into account the specific operating conditions of the enterprise in the previous year (price changes).

With the coefficient method, inventories and costs are divided into those that directly depend on changes in production volumes (raw materials, materials, costs of work in progress, finished goods in the warehouse) and those that do not depend on it (inventories, interbank supplies, deferred expenses). For the first group, the need for working capital is determined based on the size in the base year and the growth rate of production in the coming year. If an enterprise analyzes the turnover of working capital and seeks opportunities to accelerate it, then the real acceleration of turnover in the planned year must be taken into account when determining the need for working capital. For the second group of working capital, which does not have a proportional dependence on the growth of production volumes, the need is planned at the level of their average actual balances for a number of years.

If necessary, you can use analytical and coefficient methods in combination. First, using an analytical method, determine the need for working capital, depending on the volume of production, and then, using the coefficient method, take into account changes in production volume.

The direct counting method provides for a reasonable calculation of inventories for each element of working capital, taking into account all changes in the level of organizational and technical development of the enterprise, transportation of goods and materials, and the practice of settlements between enterprises. This method is very labor-intensive and requires highly qualified economists and the involvement of employees of many enterprise services (supply, legal, product sales, production department, accounting, etc.) in standardization. But this allows you to most accurately calculate the company’s need for working capital.

The direct counting method is used when organizing a new enterprise and periodically clarifying the working capital needs of existing enterprises. The main condition for its use is a thorough study of supply issues and the production plan of the enterprise. It is important to have stability of economic relations, since the frequency and guarantee of supply is the basis for calculating stock norms.

1.4 Calculation and assessment of working capital turnover indicators

To assess working capital turnover, the following indicators are used.

1. Working capital turnover in days.

where About ok is the duration of the circulation period of working capital (in days);

C about – working capital (funds);

D – reporting period(days);

RP – volume of product sales.

Turnover in days allows you to determine how long working capital goes through all stages of circulation at a given enterprise. The higher the turnover in days, the more economically financial resources are used. However, with high turnover, the risk of non-payments and disruptions in the supply of raw materials, materials, goods, etc. increases.

2. Direct turnover ratio (number of revolutions):

Where: RP – volume of product sales;

C about – working capital (funds).

Comparison of turnover ratios over the years allows us to identify trends in the efficiency of using working capital. If the number of turnovers made by working capital increases or remains stable, then the enterprise operates rhythmically and uses monetary resources rationally. A decrease in the number of turnovers made in the period under review indicates a drop in the rate of development of the enterprise and its unfavorable financial condition.

3. The inverse of the turnover ratio is the loading (consolidation) factor of working capital.

Characterizes the amount of working capital per 1 ruble. sold products. This indicator is also called the working capital ratio:

The lower the working capital utilization rate, the more efficiently they are used.

Comparison of turnover and load ratios over time allows us to identify trends in changes in these indicators and determine how rationally and effectively the working capital of the enterprise is used. Turnover indicators can be calculated for all working capital and for individual elements, such as inventories, work in progress, finished and sold products, accounts receivable.

4. Inventory turnover is calculated as the ratio of production costs to average stocks; work in progress turnover - as the ratio of goods received to the warehouse to the average annual volume of work in progress; turnover of finished products - as the ratio of shipped or sold products to the average value of finished products; Fund turnover in calculations is the ratio of sales revenue to average accounts receivable.

The general formula for calculating the standard for an individual element of working capital can be expressed as follows:

where is the standard of own working capital for the element;

– working capital norm for this element;

– one-day consumption of a given element (turnover per element/duration of turnover in days)

So, the turnover of working capital is characterized by a number of interrelated indicators: the duration of one turnover in days, the turnover ratio and the load factor. Comparison of these coefficients will allow us to determine how efficiently and effectively the working capital of the enterprise is used.

1.5 Calculation and assessment of the efficiency of using working capital

Effective use of working capital plays a big role in ensuring normal operation enterprises, increasing the level of profitability of production and depends on many factors. In modern conditions, huge Negative influence The efficiency of the use of working capital and the slowdown in their turnover are influenced by factors of the crisis state of the economy:

Decrease in production volumes and consumer demand;

High inflation rates;

Severance of economic ties;

Violation of contractual and payment discipline;

High level of tax burden;

Reduced access to credit due to high bank interest rates.

All of these factors influence the use of working capital, regardless of the interests of the enterprise.

A general indicator of the efficiency of using working capital is the profitability indicator (P ok), calculated as the ratio of profit from sales of products (P rp) or other financial result to the amount of working capital (C ok):

This indicator characterizes the amount of profit received for each ruble of working capital and reflects financial efficiency the work of the enterprise, since it is working capital that ensures the circulation of all resources in the enterprise.

The turnover of working capital may accelerate or slow down. When turnover slows down, additional funds are involved in turnover. The effect of accelerating turnover is expressed in a reduction in the need for working capital due to improved use and savings, which contributes to an increase in production volumes and, ultimately, an increase in profits. Acceleration of turnover leads to the release of part of working capital ( material resources, cash), which are used either for production needs or for accumulation in a current account. Ultimately, the solvency and financial condition of the enterprise improves.

The release of working capital as a result of accelerating their turnover can be absolute or relative. Absolute release is a direct reduction in the need for working capital, which occurs in cases where the planned production volume is achieved with a smaller volume of working capital compared to the planned requirement.

Absolute release is defined as follows:

Where. – average balance of working capital in the base and planning periods, rub.

The relative release of working capital occurs in cases where, in the presence of working capital within the planned requirement, the production plan is exceeded. At the same time, the growth rate of production volume reflects the growth rate of working capital balances. The relative release can be calculated using the formula:

where is the amount of released working capital,

– the difference between the turnover time of the reporting year with the base year

– one-day actual implementation

– the difference between the retention coefficients for the reporting and base year.

Calculation of working capital savings (E about) can be done in various ways:

1st method. With this approach, the value is found as the difference between the amount of working capital that actually occurred in the reporting period and its value for the period preceding the reporting period, reduced to the production volumes that occurred in the reporting period:

Where. – average balances of working capital in the base and planning periods, rub.;

K growth – product growth coefficient.

2nd method. With this method of calculating the value of relative savings of working capital, they proceed from a comparison of the turnover of working capital in different reporting periods.

where RP is the volume of products sold (revenue from sales)

– difference in turnover of working capital in the planning period and base periods

360 is the number of days in a calendar year.

3rd method.

Where. – turnover ratio in the planning period

. – turnover ratio in the base period.

Now let’s look at one of the most modern ways to effectively use an enterprise’s working capital – the banking product cash management. Instead of centralizing treasury functions independently, introducing total control over all processes and operations related to the management of financial flows, which inevitably leads to an increase in operating costs, an enterprise can transfer part of the treasury powers to a bank that has a cash management product. This will significantly speed up the process of turnover of enterprise funds. Depending on the degree of centralization of treasury functions and its own needs, the company may limit itself to more simple products cash management (management of interest rates, account balances) or choose more complex ones (centralization of cash flow management, documentary operations, all work with debtors and creditors, etc.).

Thus, the assessment of the efficiency of using working capital is carried out through its turnover indicators, which can accelerate or slow down. An increase in turnover leads to capital savings, an increase in production volumes and an increase in profits. Also, for a more efficient use of the company’s working capital, you can use the services of banks, namely the cash management product, which will significantly reduce operating income.

Chapter 2 Diagnostics of working capital management indicators of the enterprise LLC "Furniture-Pro"

2.1 Calculation of acceleration control indicators working capital

Furniture-Pro LLC was registered in 1993. The form of ownership of the enterprise is private. The founders of the company are individuals. Authorized capital enterprise is 8,000 rubles. Since 1997, the company has been engaged in production and wholesale sales paving slabs. The average number of employees at the enterprise is 50 people, of which 36 people are main workers, 8 people are engineers, 6 people are administrative managers.

The company produces about 10,000 m2 of six types of paving slabs and curb stones in a single-shift operation. The company leases fixed assets from another organization. Sales of products are mainly seasonal. The main buyers of the company's products are organizations and individuals in the city of Chelyabinsk and the Chelyabinsk region, as well as other constituent entities of the Russian Federation. The main competitors of the enterprise in the market are: concrete goods plant 1, Palmira LLC, Entos LLC.

In 2008, sales revenue amounted to 198,758 thousand rubles, the cost of product sales amounted to 157,454 thousand rubles, and net profit amounted to 107 thousand rubles. The Company is a legal entity from the moment of its state registration, has current and other accounts in credit institutions, including in foreign currency. The company owns property (material assets and financial resources), which is accounted for on its independent balance sheet. The company's property is formed from the funds of the founders (participants) invested in the authorized capital, from additional contributions to the company's property, sponsorship funds, income from production and economic activities, short-term loans, as well as other income.

Let's find the total volume of current assets

OAp beginning = 16454 + 6500+52044 = 74998 thousand rubles.

OAp end = 25247+6106 +93069 = 124460 thousand rubles.

Let's calculate the turnover ratio of all assets using formula 5.

K a1kv = 49689.5 / 75002 = 0.66251 revolutions

K a2kv = 55689.5 /106558 = 0.52262 revolutions

K a3kv = 43689.5/105689 = 0.41338 revolutions

K a4kv = 49689.5 / 124456 = 0.39925 revolutions

Let's calculate the turnover ratio of current assets using formula 5.

K rev1kv = 49689.5 / 74998 = 0.66254 revolutions

K rev2kv = 55689.5 /106554 = 0.52264 revolutions

K rpm = 43689.5/105678 = 0.41342 rpm

K rpm = 49689.5 / 124423 = 0.39936 rpm

Let's calculate the duration of one turnover of all assets using formula 4.

D a1q = 360 / 0.66251 = 543.39 days

D a2kv = 360 / 0.52262 = 688.84 days

D a3q = 360 / 0.41338 = 870.87 days

D a4q = 360 / 0.39925 = 901.68 days

Let's calculate the duration of one turnover of current assets using formula 4.

D ob1kv = 360 / 0.66254 = 543.36 days

D ob2kv = 360 / 0.52264 = 688.81 days

D ob3kv = 360 / 0.41342 = 870.78 days

D ob4kv = 360 / 0.39936 = 901.44 days

The absolute savings in current assets is equal to

ΔOA 1st half of the year = OA 2Q - OA 1Q x Kv p = 106554 - 74998 *(55689.5/49689.5) = + 22500 thousand rubles.

ΔOA 2nd half = OA 4Q - OA 3Q x Kv p = 124423 - 105678 *(49689.5/43689.5) = +18745 thousand rubles.

Let's calculate the inventory turnover ratio using formula 7.

Kz 1kv = 49689.5 / 5049.4 = 9.841 revolutions

Kz 2kv = 55689.5 /6311.75 = 8.823 revolutions

Kz 3kv = 43689.5/6311.75 = 6.922 revolutions

Kz 4kv = 49689.5 / 7574.1 = 6.560 rpm

Let's calculate the duration of one inventory turnover using formula 4.

D z 1 quarter = 360 / 9.841 = 36.583 days

Dz 2kv = 360 / 8.823 = 40.802 days

Dz 3Q = 360 / 6.922 = 52.009 days

Dz 4Q = 360 / 6,560 = 54,874 days

Let's calculate the share of inventories in the total volume of working capital.

Uz 1Q = 5049.4 / 74998*100% = 6.733%

Uz 2kv = 6311.75 /106554*100% =5.924%

UZ 3Q = 6311.75/105678*100% = 5.973%

Uz 4kv = 7574.1 / 124423*100% = 6.087%

Let's calculate the inventory turnover ratio.

Kpz 1kv = 5049.4 / 4132.8 = 1.222 rpm

Kpz 2kv = 6311.75 /5166 = 1.222 rpm

Kpz 3kv = 6311.75/5166 = 1.222 rpm

Kpz 4kv = 7574.1 / 6199.2 = 1.222 rpm

Let's calculate the duration of one turnover of inventories.

Dz 1 quarter = 360 / 1.222 = 294.65 days

Dpz 2Q = 360 / 1.222 = 294.65 days

Dpz 3Q = 360 / 1.222 = 294.65 days

Dpz 4Q = 360 / 1.222 = 294.65 days

Let's calculate specific gravity material costs in the full cost of production.

Umz 1Q = 4132.8 / 74998*100% = 5.511%

Umz 2Q = 5166 /106554*100% =4.846%

Umz 3Q = 5166/105678*100% = 4.888%

Umz 4Q = 6199.2 / 124423*100% = 4.982%

Let's calculate the accounts receivable turnover ratio.

Kdz 1kv = 49689.5 / 18613.8 = 2.669 revolutions

Kdz 2kv = 55689.5 /23267.25 = 2.393 revolutions

Kdz 3kv = 43689.5/23267.25 = 1.878 rpm

Kdz b4kv = 49689.5 / 27920.7 = 1.780 rpm

Let's calculate the repayment period for receivables.

Ddz 1 quarter = 360 / 2.669 = 134.857 days

Ddz 2Q = 360 / 2.393 = 150.409 days

Ddz 3Q = 360 / 1.878 = 191.721 days

Ddz 4Q = 360 / 1,780 = 202,285 days

Let's calculate the share of accounts receivable in the total volume of working capital

Udz 1kv = 18613.8 / 74998*100% = 24.819%

Udz 2kv = 23267.25/106554*100% =21.836%

Udz 3kv = 23267.25/105678*100% = 22.017%

Udz 4kv = 27920.7 / 124423*100% = 22.440%

Let's calculate the accounts payable turnover ratio.

Kkz 1kv = 49689.5 / 22414.2 = 2.217 revolutions

Kkz 2kv = 55689.5 /28017.75 = 1.988 revolutions

Kkz 3kv = 43689.5/28017.75 = 1.559 revolutions

Kkz b4kv = 49689.5 / 33621.3 = 1.478 revolutions

Let's calculate the duration of one turnover of accounts payable.

Dkz 1Q = 360 / 2.217 = 162.391 days

Dkz 2Q = 360 / 1.988 = 181.118 days

Dkz 3Q = 360 / 1.559 = 230.865 days

Dkz 4Q = 360 / 1.478 = 243.586 days

Let's calculate the share of accounts payable in the total volume of working capital

UKZ 1Q = 22414.2 / 22414.2 * 100% = 24.819%

UKZ 2Q = 28017.75 /28017.75 *100% =21.836%

UKZ 3Q = 28017.75 /28017.75 *100% = 22.017%

UKZ 4Q = 33621.3 / 33621.3 *100% = 22.440%

Let's calculate the accumulation coefficient:

Book 1st half of the year = =6.1

Book 2 half year = =6.49

Let's determine savings or excess consumption of inventory compared to the same period last year using formula 9:

Δ3 = 25247 - = +644.1 thousand rubles.

Let's calculate material productivity.

MO 1Q = 49689.5 / 4132.8 = 12.023 rub./rub.

MO 2Q = 55689.5 /5166 = 10.78 RUR/RUB

MO 3Q = 43689.5/5166 = 8.46 RUR/RUB

MO 4Q = 49689.5 / 6199.2 = RUB 8.015/RUB

Let's calculate material consumption.

IU 1Q = 1/ 12.023 = 0.083 RUR/RUB

IU 2Q = 1 / 10.78 = 0.093 RUR/RUB

IU 3Q = 1 / 8.46 = 0.118 rub./rub.

IU 4Q = 1 / 8.015 = 0.125 RUR/RUB

Let's calculate the amount of increase in production volume at the analyzed enterprise using formula 11:

ΔVp = (1.5974 -1.7724) * 124423 = - 21774.03.

Due to a decrease in working capital turnover, the loss in production volumes amounted to 21,774.03 thousand rubles.

The influence of turnover on the increase in profit P can be found using the formula:

ΔР = - 6.238 - (- 6.238) = 11.86

Current assets at the analyzed enterprise are represented by the following main structural components (Table 2).

table 2

Structure of current assets for 2008 (thousand rubles)

Index	At the beginning of the period	At the end of the period	Changes
Tangible assets in inventories
Including:

3.Construction additive
4.Technological powder
VAT on purchased assets
Accounts receivable
Total current assets

Next, we present derived indicators of the use of current assets. The importance of these indicators lies in the fact that the total inventory turnover depends on the speed at which working capital passes through individual stages and phases of the circulation.

The calculation results are shown in Table 3.

Table 3

Inventory turnover indicators in 2008

Index
Sales revenue (excluding VAT, excise taxes), thousand rubles.
Inventories, thousand rubles
Inventory turnover ratio, turnover
Inventory turnover duration coefficient, days
Share of inventories in the total volume of working capital, %
Industrial inventories, thousand rubles.
Inventory turnover, turnover
Duration of one turnover of inventories, days
Share of material costs in the total cost of production, %
Accounts receivable, thousand rubles.
Accounts receivable turnover, turnover
Receivables repayment period, days
Share of accounts receivable in the total volume of working capital, %
Accounts payable, thousand rubles.
Accounts payable turnover, turnover
Repayment period for accounts payable, days
Share of accounts payable in the total volume of working capital, %

2.2 Analysis of the dynamics of working capital acceleration management indicators

The company's current assets account for 99% of the total asset structure and it is currently increasing its production rates. The structure of assets of Mebel-Pro LLC is presented in Table 4, and their dynamics in Fig. 1 and 2.

Table 4

Analysis of the asset structure for 2008

Index	Absolute values		Share in total assets		Changes
Index	beginning of period	end of period	beginning of period	end of period		to the appanage scales, %
Fixed assets
Current assets

Rice. 1 Dynamics of non-current assets

Rice. 2 Dynamics of current assets

The dynamics of asset turnover indicators and the calculation of the influence of factors shaping the turnover of current assets are presented in Table 5.

Table 5

Dynamics of asset turnover indicators and calculation of the influence of factors shaping turnover in 2008

Index
1. Sales volume in contract prices (excluding VAT) for the quarter, thousand rubles.
2. Average quarterly balances of all assets, thousand rubles.
3. Average quarterly balances of current assets, thousand rubles.
4. Turnover ratio of all assets, turnover
5. Turnover ratio of current assets, turnover
6. Turnover ratio of current assets based on sales volume for the corresponding quarter and average balances of working capital in the first quarter, turnover
7. Change in the turnover ratio of current assets compared to the first quarter, turnover
8. Duration of one turnover of all assets, days
9. Duration of one turnover of current assets, days
10. Impact on the acceleration (slowdown) of turnover of current assets:
Sales volume (indicator 6 for the corresponding quarter - indicator 5 for the first quarter)
Average quarterly balances of working capital (indicator 5 for the corresponding quarter - indicator 6 for the corresponding quarter)

Thus, the turnover of current assets generally increased, this was due to an increase in the turnover of receivables and payables, but the turnover of inventories decreased.

Table 6 shows the calculation of the enterprise's profitability and the factors that influenced its change by quarter.

Table 6

Enterprise profitability and calculation of factors that influenced changes in its level by quarter in 2008.

Index
1. Net profit, thousand rubles.
2. Average quarterly balances of all assets, thousand rubles.
3. Enterprise profitability, %
4. Sales revenue (excluding VAT and excise taxes), thousand rubles.
5. Net profit per 1 rub.
sales, %
6. Impact on changes in enterprise profitability
Turnover of all assets

Net profit per 1 rub. implementation

Return on equity and calculation of the influence of factors on changes in its level by quarter in 2008 are shown in Table. 7.

Table 7

Return on equity and calculation

Index
influence of factors on changes in its level by quarter in 2008.
1. Average quarterly balances of own capital. capital, thousand rubles
2. Net profit, thousand rubles.
3. Return on equity, %
4. Average quarterly balances of all assets, thousand rubles.
5. Sales revenue (excluding VAT, excise taxes), thousand rubles.
6. Financial agility ratio

7. Net profit per 1 rub. products sold,%

The turnover of inventories characterizes the speed of movement of material assets and their replenishment. The faster the turnover of capital placed in inventories, the less capital is required for a given volume of business operations.

In order to ensure normal production and marketing of products, inventories must be optimal. The task is to find a “golden mean” between excessively large inventories, which can cause financial difficulties (lack of cash), and excessively small inventories, which are dangerous for the stability of production and, no less important, threaten the image of a reliable supplier in the market, since Having the inventory needed by potential customers can be seen as a means of competition.

Such a problem cannot be solved in conditions of spontaneous formation of reserves. To do this, it is necessary to analyze the state of reserves using a certain methodology that allows you to maintain competitiveness and keep capital investments at a minimum level. At the accumulation coefficient should be less than 1. The value of the coefficient is greater than 1 (which is what is observed in this enterprise) indicates the presence of excess inventories of inventory, an increase in the cost of production, with a short supply of purchased semi-finished products and components, and transport difficulties.

In this case, the values of this coefficient indicate a very low value of finished product balances. The reason for this is that the enterprise works only for a specific order.

At the analyzed enterprise during the reporting period, the share of material costs in the cost of production increased slightly. At the end of the period, there was a slight increase in material consumption, and, accordingly, a decrease in material productivity.

The correct ratio between own and borrowed sources of working capital plays an important role in strengthening the financial condition of the enterprise. In the process of analysis, it is important to assess the enterprise’s need for working capital, and then compare it with the amount of available financial sources. The working capital formation system influences the speed and efficiency of working capital use. The economic efficiency of the enterprise is characterized by relative indicators profitability or profitability. This issue is also important because market conditions are constantly changing, which means that the enterprise’s needs for working capital are unstable, and it is often practically impossible to cover them from its own sources. Profit today is an insignificant source in the structure of sources of formation.

Thus, in the process of calculations made, the enterprise has practically no non-current assets.

The company's current assets account for 99% of the total asset structure and it is currently increasing its production rates.

The turnover of current assets in the 2nd quarter tended to decrease, and then increased again, which indicates a positive trend at the enterprise.

The turnover of current assets generally increased, this was due to an increase in the turnover of receivables and payables, but the turnover of inventories decreased.

Timely receipt and efficient use of material resources ensures uninterrupted operation and increased profits.

At the analyzed enterprise, there is an excess of sources for covering inventories with its own sources of their formation. This means that cash, short-term financial investments and other working capital cover accounts payable and other short-term liabilities of the enterprise.

Conclusion

In the process of the work done, it was found that in any enterprise, working capital management is necessary, first of all, to determine the efficiency of the enterprise. The use of working capital determines how the enterprise should carry out its work, with the help of what means and from what sources. Improving the use of working capital leads to the rhythmic operation of the enterprise, and with ineffective use of working capital, there is an irrational use of the available working capital, which will soon lead to irregular work and a deterioration in the condition of the enterprise.

Any organization has property in the form of fixed and working capital.

During 2008, the company observed a slowdown in the turnover of working capital, which contributes to an increase in the need for working capital. Working capital was released and absolute savings amounted to 11,926 thousand rubles.

Due to a decrease in working capital turnover, the loss in production volumes amounted to 21,774.03 thousand rubles.

The main share of inventories falls on finished products and work in progress. During the reporting period, inventory turnover decreased by 0.21 days and at the end of the year amounted to 7.81 days. This indicates a decrease in the efficiency of inventory management, but there was an increase in the turnover of deferred expenses, and this also characterizes the decline in the enterprise’s production activity. The accumulation coefficient was 6.49, and should be less than 1, which indicates the presence of excess inventories of inventory, rising production costs, short supply of purchased semi-finished products and components, and transport difficulties.

There is an increase in inventories due to an increase in their overall turnover, which may have led to the accumulation of inventories.

The repayment period for accounts receivable by the end of the year increased from 141 days to 168 days, which indicates a deterioration in settlements with customers. Accounts receivable at the enterprise account for more than half of the current assets. By the end of the year, its size increased by 41,025 thousand rubles.

To ensure uninterrupted production of commercial products for the purpose of subsequent sale and profit, an industrial enterprise needs to have working capital ( current assets). Their size should allow the purchase of appropriate materials and components within a certain time frame. Part of the working capital is required to pay workers and pay for consumed energy resources (electricity, heat, hot and cold water) during the production process. Cash costs are also necessary when storing and shipping finished products to consumers.

Some of the working capital (future expenses) is spent on the development of design documentation for samples of new products, on the preparation of technology for their production, on the redevelopment of workshops and reconfiguration of equipment, etc. In cases where it is impossible to avoid attracting others to produce commercial products industrial enterprises(usually this is typical for production especially complex species products), advance payments to related enterprises are required.

In short, organizing an uninterrupted production process at an industrial enterprise is impossible without investing in current operations. However, the features of the formation and use of working capital at Russian industrial enterprises during the formation and development of market relations (and, consequently, in conditions of increased risk) are not sufficiently analyzed in our economic literature and other practical research.

List of sources and literature used

1. PBU No. 19/02 “Accounting for financial investments.”

2. PBU No. 15/01 “Accounting for loans and credits and the costs of servicing them.”

3. PBU No. 5/01 "Accounting for inventories."

4. PBU No. 4/99 "Accounting statements of an organization."

5. Efimova O.V., Melnik M.V. Analysis financial statements: M.,OMEGA-L, 2004.

6. Kovalev V.V., Kovalev Vit.V. Enterprise finance: M., TK Velby, 2003.

7. Kovaleva A.M., Barannikova N.P., Bogacheva V.D. Finance and statistics: M., 1998.

8. Kolchina N.V., Polyak G.B., Pavlova L.N. and others. Enterprise finance. /Ed. prof. Kolchina N.V./ – 2nd ed., revised. and additional: M., UNITY - DANA, 2001

9. Pavlova L.N. Enterprise finance: M., Finance, UNIT, 1998

10. Sheremet A.D., Sayfulin R.S. Enterprise finance: M., INFRA - M, 1999

11. Magazine “Financial Director”: M., No. 11, pp. 38-40

12. Magazine “Financial Director”: M., No. 12, pp. 19-21

annotation

This course work consists of 43 sheets, on which 37 sheets of theoretical part and 6 sheets of calculated data for a commercial enterprise. The methodological basis of the course work is the works of Sheremet A.D., Saifulin R.S. and Kolchina N.V.

The paper examines proposals for improving the quality of working capital management. They are considered using the example of a specific enterprise, and actions are also proposed to optimize the work of a financial manager with the working capital of the enterprise.

Current assets management- This:

Accounting for all components of current assets at each reporting date;

Analysis of working capital turnover, reasons for its acceleration or deceleration;

Planning the enterprise's annual needs for working capital, etc.;

Control for current state essential elements current assets of the enterprise in the process of production activities;

Management of liquidity of current assets of the enterprise and their structure;

Development and implementation into practice financial service enterprises modern methods management of current assets, etc.

When managing working capital, special attention must be paid to planning non-standardized working capital, primarily cash as the most liquid assets of the enterprise.

3. Task

The working capital standard for the enterprise as a whole for the reporting year amounted to 131.0 million rubles. For the planned year, the working capital standard has been determined: for raw materials - 43.5 million rubles; spare parts - 5.5 million rubles; work in progress - 18.6 million rubles; for finished products - 65.0 million rubles. Determine the total standard of current assets for the enterprise for the planned year and the increase in the standard compared to the reporting year.

Solution:

1) The total working capital standard for the enterprise as a whole for the planned year = 43.5 + 5.5 + 18.6 + 65.0 = 132.6 million rubles.

2) Increase in the standard compared to the reporting year = 132.6 - 131.0 = 1.6 million rubles.

4. Name the efficiency indicators for the use of working capital.

The efficiency of using working capital is characterized by the following interrelated indicators of turnover: turnover ratio (K0), duration of one turnover in days (Od), working capital load factor (K 3).

1. The turnover ratio is defined as the ratio of the amount of revenue from the sale of products, works, services to the average balance of working capital according to the formula: Ko=R/OS

where K O - turnover ratio; R - revenue (net) from the sale of products, works, services for the analyzed period, p. 1; OS - average balance of working capital, rub.

2. The duration of one inventory turnover in days (OD) is the ratio of the amount of the average balance of working capital to the amount of one-day sales volume for the analyzed period. The calculation is made using the formula: Od = OS x D

where Od - turnover of working capital, days; OS – average balance of working capital, rubles; D - number of days of the analyzed period (360, 180, 90); R - revenue (net) from the sale of products, works, services for the analyzed period, rub.

3. The working capital utilization factor (K3) shows the amount of working capital advanced for 1 ruble. implementation. At its core, this indicator represents the capital intensity of working capital and is calculated as the ratio of the average balance of working capital to the volume of products sold for the analyzed period. K3 = OS/R

where K 3 is the working capital load factor; OS - average balance of working capital, rubles; R - revenue (net) from the sale of products, works, services, r.

Exercise 23

1. What is the essence financial planning?

Financial planning is the system development process financial plans and planned indicators (standards) to ensure the development of the organization with the necessary financial resources and improving the efficiency of its financial activities in the future.

The financial planning process includes several stages.At the first stage are analyzed financial indicators behind previous period. Second phase provides for the preparation of basic forecast documents that relate to long-term financial plans and are included in the structure of the organization’s scientifically based business plan. At the third stage forecast indicators are being clarified and specified financial documents by drawing up current financial plans. At the fourth stage operational financial planning is carried out. The financial planning process is being completed practical implementation of plans and monitoring their implementation.

The end product of financial planning is financial plans. A financial plan is a special form of plan, the indicators of which are always reflected in monetary terms and justify the movement of financial resources for a certain period.

Name the main information sources used in developing the organization's financial plans.

The starting point and information sources for developing plans are:

Agreements (contracts) concluded with consumers of products and suppliers of material resources;

Accounting policy of the organization;

Assessment of material and financial resources, as well as the state of production assets at the beginning of the forecast period;

The results of the analysis of the state of production, the need and possibility of its expansion, the competitiveness of manufactured products, their sales based on market conditions to forecast cash receipts for the corresponding period;

Economic standards approved by legislative acts, i.e. tax rates, rates of mandatory contributions to special funds, discount rate of bank interest, minimum monthly wage, etc.

Task

Draw up the income and expenditure parts of the annual plan, draw conclusions about their relationship. Initial information (million rubles):

1. Profit from sales of products -18800

2. Expenses for other operations - 2500

3. Depreciation charges-560

4. Long-term loans for capital investments -120

5. The volume of capital investments for the reconstruction of the main production - 250

6. Increase in working capital - 650

7. Increase in sustainable liabilities - 150

8. Contributions to reserve funds-566

9. Repayment of long-term loans and interest on them - 500

10. Repayment of loans to replenish working capital-80

11. Formation of reserve funds by decision of the organization:

– reserve for future expenses and payments-12

12.Payment of dividends-55

14. Remuneration based on the results of the year - 218

15. Income tax-19

Solution:

Income part of the annual plan=1+3+4+5+6+7

DH=18800+560+120+250+650+150=20530 million rubles.

Consumable part=2+8+9+10+11+12+13+14+15

RF=2500+566+500+80+12+55+158+218+19=4108

The revenue side of the budget exceeds the expenditure side by 16,422 million rubles.

4.Name the main tasks of financial planning and its purpose.

The main objectives of financial planning are:providing the necessary financial resources for the production, investment and financial activities of the organization; determining ways to effectively invest capital; identification of on-farm reserves for increasing profits: establishing rational financial relations with the budget, servicing banks and counterparties.

Purpose financial planning is to provide the production process with financial resources and fulfill obligations to the financial and credit system.

Exercise 24

Working capital is assets that can be converted into cash within one production cycle or one year.

Net current assets refers to the difference between current assets and current circumstances.

Working capital is the mobile part of an enterprise's assets. Current assets include inventories and costs, finished products, accounts receivable, and cash. Being in constant motion, current assets ensure an uninterrupted production process. At the same time, there is a constant and natural change in the form of value: from monetary it turns into commodity, then into production and again into commodity and monetary. Thus, there is an objective need to advance funds to create normal conditions for production activities until the receipt of revenue from the sale of products.

Current assets make up a significant share of all assets of the enterprise.

The objects of management of current assets are: the degree of their liquidity, composition, structure, size, sources of coverage and their structure.

Based on the degree of liquidity, a distinction is made between slowly sold, quickly sold and absolutely liquid current assets.

Slowly selling current assets include inventories of raw materials, supplies, work in progress, finished products.

Based on an analysis of market conditions, the financial manager must develop a forecast of expected sales for the coming period.

Less liquid stocks of raw materials and supplies. The financial manager must proceed from the planned production volume and take into account the costs of warehousing and storing stocks of raw materials and materials, losses from spoilage and reduction in quality, the degree of risk in cases of changes in the production program, depending on the purchased batch and other factors.

Quickly realizable current assets include accounts receivable, since they can be quickly transformed into cash. Current assets include accounts receivable whose repayment period does not exceed one year. It includes: accounts receivable from core activities, since the company mainly sells finished products on credit, accounts receivable from financial transactions; advances to employees; funds on deposits.

When analyzing the possibilities of transforming receivables into cash, it is necessary to estimate the amount of bad debts. It can be calculated based on unpaid receivables for the previous planning period, taking into account changes in the economic situation. Two methods are used for assessment. The first method is based on the percentage of repaid debt. The second method determines the percentage of unpaid bills or bills to their total volume.

The most liquid part of current assets are securities, which are short-term financial investments, securities of other enterprises, government bonds, etc.

Absolutely liquid assets include cash on hand and in bank accounts. Working capital includes funds intended for current cash payments.

The task of the financial manager is to determine the relationship between cash and securities.

The composition, structure, and amount of working capital are influenced by: the nature and complexity of production, the duration of the production cycle, the cost of raw materials, the terms of their delivery, the accepted payment procedure, industry specifics, and market conditions.

The amount of working capital is not constant and depends not only on the volume of production, but also on factors such as seasonality of production, uneven supply, and late receipt of funds for shipped products. Therefore, it is customary to divide working capital into constant and variable.

Fixed working capital can be considered as the portion of current assets that is relatively constant throughout the production cycle.

The size of variable capital determines the additional need for working capital associated with deviations that arise during certain periods of the enterprise's production activities.

The financial manager is faced with the task of determining the optimal level of working capital. If the amount of working capital is underestimated, then the enterprise will constantly experience a lack of cash, have a low level of liquidity, as a result, interruptions in the production process, loss of profit, and vice versa, the more current assets exceed current liabilities, the higher the liquidity of the enterprise. Thus, the working capital management strategy should be based on ensuring the solvency of the enterprise and determining the optimal volume and structure of working capital.

A comprehensive working capital management policy includes the management of current assets and current liabilities.

Management of current assets means determining their size, composition and structure.

In financial management, there are four models of working capital management: ideal, aggressive, conservative, moderate.

An ideal model for managing current assets and liabilities.

Current assets are net working capital. Current liabilities are the same in size as current assets.

The very name “ideal” suggests that in practice it is extremely rare.

Management of current liabilities accordingly means determining the size, composition and structure of current liabilities.

Current assets are fully covered by short-term liabilities. This model is risky from a liquidity perspective. In the event of an extreme situation, the company will be forced to sell part of its fixed assets to cover current accounts payable.

Aggressive model for managing current assets and liabilities.

Current assets:

1. High share of all assets of the enterprise

2. Long turnover period of current assets.

Current liabilities:

1. Relatively high share of short-term loans in the composition of all liabilities.

The share of working capital is significantly higher than the share of fixed assets. The company has large reserves of raw materials, materials, finished products, and significant accounts receivable. A short-term loan finances not only the variable part of current assets, but also part of the permanent current assets. The greater the share of short-term credit in the financing of permanent working capital, the more aggressive the financial policy. When managing working capital using an aggressive model, the company's costs for paying interest on a loan increase, which reduces economic profitability and creates a risk of loss of liquidity.

Conservative model for managing current assets and liabilities.

Current assets:

1. Low share of current assets in the assets of the enterprise.

2. Short asset turnover period.

Current liabilities:

1. Low share of short-term loans in liabilities.

The share of current assets is relatively low. Accordingly, the share of short-term financing in the total value of all liabilities of the enterprise is small. The short-term loan covers only part of the variable current assets of the enterprise. All remaining needs for working capital are covered by permanent liabilities. The financial manager chooses this policy subject to a thorough study of sales volumes, clear organization of mutual settlements, and established relationships with suppliers of raw materials. Conservative policies contribute to the growth of return on assets. At the same time, it contains elements of risk in case of unforeseen situations in calculations or during the sale of products.

Moderate model for managing current assets and liabilities.

Current assets:

1. Current assets make up half of the total assets of the enterprise.

2. Average turnover period of working capital.

Current liabilities:

1. Relatively average level of short-term credit as part of liabilities.

Moderate financial policy and working capital management is a compromise between an aggressive and a conservative model. In this case, all parameters are averaged.

The financial manager must evaluate the economic profitability of working capital management based on a comparison of different models for managing current assets.

Based on a comprehensive assessment of the size, composition and structure of current assets, a financial manager can develop a comprehensive working capital management policy for each specific period of the enterprise’s production activity.

Lecture No. 6

The financial analysis In the organisation.

Related information.

Working capital is the assets of an enterprise that are renewed with a certain regularity to ensure current activities, investments in which are turned over at least once during the year or one production cycle.

Working capital is the mobile part of an enterprise's assets. Current assets include: inventories and costs, finished products, accounts receivable, cash. Being in constant motion, current assets ensure the uninterrupted production process. At the same time, there is a constant and natural change in the forms of value: from monetary to commodity, then to production, again to commodity and monetary.

The objects of management of current assets are: the degree of their liquidity, composition, structure, size, sources of coverage and their structure. Based on the degree of liquidity, a distinction is made between slow-selling, fast-selling and absolutely liquid current assets.

Slowly selling current assets include inventories of raw materials, materials in progress, and finished products. Finished goods inventories are the more liquid part of slow-selling assets. Determining the amount of working capital required to form stocks of finished products in a warehouse is closely related to forecasts of sales volumes of manufactured products. With a well-established volume of finished products, their accumulation in the warehouse can be minimal.

The financial manager, based on an analysis of market conditions, must develop a forecast of expected sales for the coming period. Otherwise, the products may end up in the warehouse, as a result of which a significant part of the funds will be diverted from circulation, which may affect the financial condition of the enterprise.

Inventories of raw materials and materials are less liquid, so the task of the financial manager is to determine the optimal amount of inventories necessary to ensure the uninterrupted process of production and sales of products.

The amount of money invested in work in progress depends on the duration of the production cycle, which is determined by the production technology, product, its technical and economic characteristics and consumer properties.

Quickly realizable current assets include: accounts receivable, since they can quickly be transformed into cash. Accounts receivable are formed during the sale of products and represent funds that buyers owe the company. Current assets include accounts receivable whose repayment period does not exceed one year.

The level of accounts receivable is influenced by many factors, both objective and subjective. Objective factors include the economic conditions in which business activities are carried out. Subjective factors include the professional level of the financial manager, the credit policy of the enterprise, which affects implementation.

When managing accounts receivable, it should be taken into account that part of it may not be paid. For the supplier company, this means a reduction in revenue from product sales and profit margins. It is necessary to estimate the amount of bad debts. It can be calculated based on the amount of unpaid receivables for the previous period, taking into account changes in the economic situation. Two methods are used for assessment.

In the first method, the percentage ratio of repaid receivables to sales volume is taken as a basis. The second method determines the percentage of unpaid bills and bills to their total volume. The financial manager must control the level of accounts receivable, its structure, and determine the amount of the reserve for doubtful debts.

The most liquid part of current assets are securities, which are short-term financial investments in securities of other enterprises, government bonds, etc.

Absolutely liquid assets include cash on hand and in bank accounts. Working capital includes funds intended for current payments. The task of the financial manager is to determine the relationship between cash and securities. When solving this problem, you should evaluate the benefits of creating a reserve of funds, the costs associated with their storage, or the costs of short-term investment of funds in securities with a certain income.

The composition and structure, the amount of working capital is influenced by: the nature and complexity of production, the duration of the production cycle, the cost of raw materials, the payment procedure, industry specifics and market conditions. The amount of working capital is not constant, it depends on the volume of production, its seasonality, uneven supply, untimely receipt of funds for shipped products, therefore it is customary to divide working capital into constant and variable.

Fixed working capital is the portion of current assets that is relatively constant during the production cycle. This part may be the average or minimum amount of current assets required for production activities. The amount of variable capital determines the additional need for working capital associated with deviations that arise during certain periods of the enterprise’s production activity (the need for additional costs due to the seasonal nature of work, the uniqueness of the sale of finished products, the growth of accounts receivable, etc.).

The financial manager is faced with the task of determining the optimal level of working capital. If the amount of working capital is underestimated, then the enterprise will constantly experience a lack of cash, have a low level of liquidity and, as a result, interruptions in the production process and loss of profit. And, conversely, the greater the excess of current assets over current liabilities, the higher the liquidity of the enterprise. But an increase in working capital in comparison with the optimal need for them leads to a slowdown in their turnover and also reduces the amount of profit.

Thus, the working capital management strategy is based on ensuring the solvency of the enterprise and determining the optimal volume and structure of working capital. A comprehensive working capital management policy includes the management of current assets and current liabilities.

Management of current assets should be understood as determining the size, composition and structure. The strategy for financing current assets is determined depending on what decision the financial manager makes regarding sources of covering temporary needs, i.e. covering the variable part of working capital.

In financial management, there are four models of working capital management: ideal, aggressive, conservative, moderate. The ideal model assumes that current assets - net working capital - are equal in value to current liabilities. This model is practically extremely rare.

Working capital Short-term

financing

Fixed assets Long-term

financing

Figure 5 – Ideal working capital management model

It follows from the graph that current assets are fully covered by short-term liabilities. This model is risky from a liquidity perspective. If it is necessary to make full settlements with the majority of creditors, the company will be forced to sell part of its fixed assets to cover current accounts payable.

Aggressive model characterized by the fact that it has a high share of current assets in the composition of all assets and a long period of their turnover, as well as a relatively high share of short-term loans in the composition of all liabilities.

A assets

Short-term financing

Working capital

Fixed assets Long-term financing

Figure 6 – Aggressive working capital management model

As you can see, the share of working capital is significantly higher than the share of fixed assets. The company has large reserves of raw materials, materials, finished products, and significant accounts receivable. A short-term loan finances not only the variable part of current assets, but also part of the permanent current assets. Consequently, the greater the share of short-term credit in the financing of permanent working capital, the more aggressive the financial policy. With an aggressive working capital management model, the company's costs for paying interest on the loan increase, which reduces profitability and creates the risk of loss of liquidity.

Conservative model assumes that current assets have a low share of the enterprise’s assets, a short asset turnover period, and current liabilities have a low share of short-term credit or its absence.

Short-term financing

Working capital

Fixed assets Long-term financing

Figure 7 – Conservative working capital management model

It follows from the graph that the share of current assets is relatively low, therefore the share of short-term financing in the total value of all liabilities of the enterprise is small. The short-term loan covers only part of the variable current assets of the enterprise. All remaining needs for working capital are covered by permanent liabilities.

The financial manager chooses such a policy precisely, provided that sales volumes are thoroughly studied, mutual settlements are clearly organized, and relationships with suppliers are well established. Conservative policies contribute to the growth of return on assets. However, it contains elements of risk in case of unforeseen situations.

Moderate model is used when current assets make up half of all assets, when there is an average turnover period of working capital and an average level of short-term credit as part of liabilities.

A assets

Short-term financing

Working capital

Fixed assets Long-term financing

Figure 8 – Moderate working capital management model

A moderate financial policy for working capital management is a compromise between aggressive and conservative models. In this case, the indicators: profitability, turnover, liquidity will be averaged. The financial manager must evaluate the profitability of working capital management. Based on a comparison of various models for managing current assets.

Working capital and asset management policies are important, first of all, from the standpoint of ensuring the continuity and efficiency of the current activities of the enterprise.

Working capital management involves optimizing its size, structure and values of its components. As for the total amount of working capital, it is usually; its reasonable growth is considered as a positive trend; however, there may be exceptions, for example, its growth due to an increase in bad debtors.

The target setting of the working capital management policy is to determine the volume and structure of current assets sufficient to ensure long-term production and efficient financial activity of the enterprise.

The formulated target is of a strategic nature; no less important is maintaining working capital in an amount that optimizes the management of current activities. From the perspective of daily activities, the most important financial and economic characteristics of an enterprise are its liquidity and solvency, i.e. ability to repay short-term accounts payable on time. For any enterprise, an adequate level of liquidity is one of the most important characteristics of the stability of economic activity. Loss of liquidity is fraught not only with additional costs, but also with periodic stoppages of the production process.

The working capital management policy must ensure a compromise between the risk of loss of liquidity and operational efficiency. This comes down to solving two important problems.

1. Ensuring solvency.

2. Ensuring an acceptable volume, structure and profitability of assets.

Working capital (current assets) are assets that can be converted into cash during one production cycle. Net current assets are usually understood as the difference between current assets and current liabilities.

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