How is the working capital turnover ratio calculated? How to calculate the turnover ratio of working capital

The student must:

Know

Indicators characterizing the turnover of working capital;

be able to:

Calculate the turnover ratio of working capital.

Guidelines

To analyze the use of working capital, assess the financial condition of the enterprise and develop a plan of organizational and technical measures to accelerate their turnover and reduce the duration of one turnover, indicators are used that reflect the actual process of working capital movement and the amount of their release.

The estimated need for working capital is directly proportional to the volume of production and inversely proportional to the speed of their circulation (number of revolutions). The greater the number of turnovers of working capital, the less the need for working capital.

The turnover of working capital and the efficiency of their use is characterized by the following indicators:

Turnover ratio working capital shows how many turnovers make working capital for the period under consideration:

Turns or , revolutions

The turnover ratio also characterizes capital return on working capital and shows what volume of output (in prices or at cost) is provided by one ruble of working capital. The higher the value of the turnover ratio of working capital, the more efficiently the company's working capital is used in the period under review, the higher the return on each ruble invested in working capital.

The time during which working capital makes a complete cycle, i.e., the period of production and the period of circulation pass, is called the period, or the duration of the turnover of working capital. This indicator characterizes average velocity of funds at the enterprise. It does not coincide with the actual period of production and sale of certain types of products. Duration of one revolution in days (Add) is determined by the formula:

Where OS- balances (availability) of working capital:

average over time (OSSR) or at the end of the period (OSK), rub.;

QComrade; Qreal - volume of marketable or sold products, rub.

Stov - the cost of commercial products, rub.;

T - the number of days in the reporting period (360 - in a year, 90 - in a quarter, 30 - in a month)

Coefficient of loading (fixing) working capital (Kz) -- the reciprocal of the turnover ratio. It characterizes the capital intensity of working capital and shows the amount of working capital, which ensures the release of marketable or sold products, in the amount of I rub. (in prices or at cost) and is calculated by the formula:

Rub. OS / rub.

The lower the value of the working capital utilization factor, the more efficiently the company's working capital is used in the period under consideration.

When analyzing the use of working capital, the value of their absolute and relative release is calculated.

Absolute Release working capital. It makes sense to calculate only when the same volume output according to plan and actually or with the same volume of output in the reporting and base periods, since when the volume of output changes, the required value (amount) of working capital also changes. Absolute Release calculated as the difference between the average balance (availability) of working capital involved in turnover, the subsequent and previous periods

, rub.

This indicator can have both a plus sign and a minus sign. If Δ OSabs has a minus sign, then there is a release of working capital, and if Δ OSabs has a plus sign, then funds for this amount are additionally involved in circulation.

For example, in practice, absolute release (with a minus sign) occurs when the actual need for working capital in the reporting period is less than the planned one, subject to the release of the same volume of products.

Relative release working capital takes place only when accelerating working capital turnover, i.e. with a reduction in the duration of the 1st revolution and an increase in the number of turnovers of working capital in the subsequent period of time compared with the previous period. At the same time, the volume of production may change:

, rub. or

Rub. or

Qone- one-day output (in prices or at cost) in the subsequent period (or actual), rub.;

ΔAdd- reduction in the duration of one turnover of working capital in the next period of time compared to the previous period, days.

The minus sign ΔAdd shows that there is a release of working capital.

If Q0 = Q1 or Qpl= Qf, then the value Δ OSot=Δ OSabs

working capital is a set of funds advanced to create working capital and circulation funds that ensure the continuity of the company.

revolving funds- these are assets that, as a result of its economic activity, completely transfer their value to the finished product, take a one-time participation in, changing or losing their natural-material form.

Revolving production assets enter production in their natural form and are entirely consumed in the production process. They transfer their value to the created product completely.

circulation funds associated with servicing the process of circulation of goods. They do not participate in the formation of value, but are its carriers. After the completion, manufacture of finished products and its sale, the cost of working capital is reimbursed as part of (works, services). This creates the possibility of a systematic resumption of the production process, which is carried out through a continuous circulation of enterprise funds.

Working capital structure- is the ratio between the individual elements of working capital, expressed as a percentage. The difference in the structures of working capital of companies is determined by many factors, in particular, the characteristics of the organization's activities, the conditions for doing business, supply and marketing, the location of suppliers and consumers, the structure of production costs.

• (raw materials, basic materials and purchased semi-finished products, auxiliary materials, fuel, containers, spare parts, etc.);
• with a service life of not more than one year or a cost of not more than 100 times (for budgetary organizations - 50 times) the established minimum wage per month (low-value consumable items and tools);
• unfinished production and semi-finished products of own manufacture (objects of labor that have entered the production process: materials, parts, assemblies and products that are in the process of processing or assembly, as well as semi-finished products of their own manufacture, not fully completed by production in some workshops of the enterprise and subject to further processing in other workshops of that or enterprises);
• Future expenses(non-material elements of working capital, including the costs of preparing and developing new products that are produced in a given period, but are related to products of a future period; for example, costs for the design and development of technology for new types of products, for rearranging equipment).

circulation funds

circulation funds- funds of the enterprise operating in the sphere of circulation; part of working capital.

• enterprise funds invested in stocks of finished products, goods shipped but not paid for;
• funds in settlements;
• cash on hand and in accounts.

The amount of working capital employed in production is determined mainly by the duration of production cycles for the manufacture of products, the level of development of technology, the perfection of technology and the organization of labor. The amount of circulation funds depends mainly on the conditions for the sale of products and the level of organization of the system of supply and marketing of products.

Working capital is a more mobile part.

In every the circulation of working capital goes through three stages: monetary, production and commodity.

To ensure an uninterrupted process, the enterprise forms working capital or material values ​​that await their further production or personal consumption. Inventories are the least liquid item among items of current assets. The following inventory valuation methods are used: for each unit of purchased goods; by average cost, in particular, by weighted average cost, moving average; at the cost of the first time purchases; at the cost of the most recent purchases. The unit of accounting for working capital as inventories is a batch, a homogeneous group, an item number.

• Insurance stocks- a reserve of resources intended for the uninterrupted supply of production and consumption in cases of a decrease in supplies compared to those provided.
• Current stocks- stocks of raw materials, materials and resources to meet the current needs of the enterprise.
• Preparatory stocks- stocks dependent on the production cycle are necessary if the raw materials must undergo any processing.
• carryover stocks- part of unused current reserves, which are transferred to the next period.

Working capital is simultaneously at all stages and in all forms of production, which ensures its continuity and uninterrupted operation of the enterprise. Rhythm, coherence and high performance largely depend on optimal size of working capital(circulating production assets and circulation funds). Therefore, the process of normalization of working capital, which relates to the current financial planning at the enterprise, is of great importance. Rationing of working capital is the basis for the rational use of economic assets of the company. It consists in the development of reasonable norms and standards for their consumption, necessary to create a constant minimum stock, and for the smooth operation of the enterprise.

The standard of working capital establishes their minimum estimated amount, which is constantly required by the enterprise for work. Failure to fill the standard of working capital may lead to a reduction in production, non-fulfillment of the production program due to interruptions in production and sales of products.

Normalized working capital- the size of inventories planned by the enterprise, work in progress and the balance of finished products in warehouses. The working capital stock rate is the time (days) during which the fixed assets are in the production stock. It consists of the following reserves: transport, preparatory, current, insurance and technological. The working capital ratio is the minimum amount of working capital, including cash, necessary for a company, a firm to create or maintain carry-over inventory and ensure business continuity.

Sources of the formation of working capital can be profit, loans (banking and commercial, i.e. deferred payment), equity (authorized) capital, shares, budgetary funds, redistributed resources (insurance, vertical management structures), accounts payable, etc.

The efficiency of the use of working capital has an impact on the financial performance of the enterprise. In its analysis, the following indicators are used: the availability of own working capital, the ratio between own and borrowed resources, the solvency of the enterprise, its liquidity, the turnover of working capital, etc. The turnover of working capital is understood as the duration of the successive passage of funds through individual stages of production and circulation.

The following indicators of turnover of working capital are distinguished:

• turnover ratio;
• duration of one turn;
• working capital utilization factor.

Turnover ratio(rate of turnover) characterizes the amount of proceeds from the sale of products on the average cost of working capital. Duration of one turn in days is equal to the quotient of dividing the number of days for the analyzed period (30, 90, 360) to the turnover of working capital. The reciprocal of the turnover rate shows the amount of working capital advanced for 1 rub. proceeds from the sale of products. This ratio characterizes the degree of loading of funds in circulation and is called working capital utilization factor. The lower the value of the load factor of working capital, the more efficient use of working capital.

The main goal of managing the assets of an enterprise, including working capital, is to maximize the return on invested capital while ensuring a stable and sufficient solvency of the enterprise. To ensure sustainable solvency, the enterprise must always have a certain amount of money on the account, actually withdrawn from circulation for current payments. Part of the funds should be placed in the form of highly liquid assets. An important task in terms of managing the working capital of an enterprise is to ensure the optimal balance between solvency and profitability by maintaining the appropriate size and structure of current assets. It is also necessary to maintain the optimal ratio of own and borrowed working capital, since the financial stability and independence of the enterprise, the possibility of obtaining new loans directly depend on this.

Analysis of the turnover of working capital (analysis of the business activity of the organization)

working capital- these are funds advanced by organizations to maintain the continuity of the production and circulation process and returned as part of the proceeds from the sale of products in the same monetary form with which they began their movement.

To assess the effectiveness of the use of working capital, indicators of turnover of working capital are used. The main ones are the following:

• average duration of one turnover in days;
• the number (number) of turnovers made by working capital during a certain period of time (year, half year, quarter), otherwise - the turnover ratio;
• the amount of employed working capital per 1 ruble of sold products (working capital utilization factor).

If working capital goes through all stages of the cycle, for example, in 50 days, then the first indicator of turnover (average duration of one turnover in days) will be 50 days. This indicator approximately characterizes the average time that passes from the moment of purchase of materials to the moment of sale of products made from these materials. This indicator can be determined by the following formula:

• П - average duration of one turn in days;
• SO - the average balance of working capital for the reporting period;
• P - sales of products for this period (net of value added tax and excises);
• B - the number of days in the reporting period (in a year - 360, in a quarter - 90, in a month - 30).

So, the average duration of one turnover in days is calculated as the ratio of the average balance of working capital to the one-day turnover for the sale of products.

The indicator of the average duration of one turnover in days can be calculated in another way, as the ratio of the number of calendar days in the reporting period to the number of turnovers made by working capital for this period, i.e. according to the formula: P \u003d B / CHO, where CHO is the number of turnovers made by working capital for the reporting period.

The second turnover rate- the number of turnovers made by working capital for the reporting period (turnover ratio) - can also be obtained in two ways:

• as the ratio of sales of products minus value added tax and excises to the average balance of working capital, i.e. according to the formula: CHO \u003d P / CO;
• as the ratio of the number of days in the reporting period to the average duration of one turnover in days, i.e. according to the formula: CHO \u003d V / P .

The third indicator of turnover (the amount of employed working capital attributable to 1 ruble of sold products, or otherwise - the utilization factor of working capital) is defined in one way as the ratio of the average balance of working capital to the turnover for the sale of products for a given period, i.e. according to the formula: CO / R.

This indicator is expressed in kopecks. It gives an idea of ​​how many kopecks of working capital are spent to receive each ruble of proceeds from the sale of products.

The most common is the first indicator of turnover, ie. average duration of one turn in days.

Most often, turnover is calculated per year.

In the analysis, the actual turnover is compared with the turnover for the previous reporting period, and for those types of current assets for which the organization sets standards - also with the planned turnover. As a result of such a comparison, the value of the acceleration or deceleration of turnover is determined.

In the analyzed organization, the turnover slowed down, both for standardized and non-standardized working capital. This indicates a deterioration in the use of working capital.

With a slowdown in the turnover of working capital, an additional attraction (involvement) of them into circulation occurs, and during acceleration, working capital is released from circulation. The amount of working capital released due to the acceleration of turnover or additionally attracted as a result of its slowdown is determined as the product of the number of days by which the turnover accelerated or slowed down by the actual one-day sales turnover.

The economic effect of accelerated turnover is that the organization can produce more products with the same amount of working capital, or produce the same volume of products with a smaller amount of working capital.

The acceleration of the turnover of working capital is achieved by introducing new equipment into production, advanced technological processes, mechanization and automation of production. These activities help to reduce the duration of the production cycle, as well as increase the volume of production and sales.

In addition, to speed up turnover, it is important: the rational organization of logistics and marketing of finished products, the observance of the regime of savings in the costs of production and sale of products, the use of forms of non-cash payments for products that contribute to the acceleration of payments, etc.

Directly in the analysis of the current activities of the organization, it is possible to identify the following reserves for accelerating the turnover of working capital, which consist in eliminating:

• excess inventories: 608 thousand rubles;
• goods shipped, not paid on time by buyers: 56 thousand rubles;
• goods in safe custody with buyers: 7 thousand rubles;
• immobilization of working capital: 124 thousand rubles.

Total reserves: 795 thousand rubles.

As we have already established, the one-day sales turnover in this organization is 64.1 thousand rubles. So, the organization has the opportunity to accelerate the turnover of working capital by 795: 64.1 = 12.4 days.

To study the causes of changes in the rate of turnover of funds, it is advisable, in addition to the considered indicators of general turnover, to calculate also indicators of private turnover. They refer to certain types of current assets and give an idea of ​​the time spent by working capital at various stages of their circulation. These indicators are calculated in the same way as stocks in days, however, instead of the balance (stock) on a certain date, the average balance of this type of current assets is taken here.

Private turnover shows how many days on average there are working capital in this stage of the cycle. For example, if the private turnover for raw materials and basic materials is 10 days, then this means that from the moment the materials arrive at the organization's warehouse to the moment they are used in production, an average of 10 days pass.

As a result of summing up the private turnover indicators, we will not get the total turnover indicator, since different denominators (turnovers) are taken to determine the private turnover indicators. The relationship between indicators of private and general turnover can be expressed in terms of total turnover. These indicators allow you to establish what impact the turnover of certain types of working capital has on the overall turnover rate. The terms of the total turnover are defined as the ratio of the average balance of this type of working capital (assets) to the one-day turnover for the sale of products. For example, the term of the total turnover for raw materials and basic materials is equal to:

Divide the average balance of raw materials and basic materials by the one-day turnover for the sale of products (excluding value added tax and excises).

If this indicator is, for example, 8 days, then this means that the total turnover due to raw materials and basic materials accounts for 8 days. If we sum up all the terms of the total turnover, then the result will be an indicator of the total turnover of all working capital in days.

In addition to those considered, other turnover indicators are also calculated. So, in analytical practice, the indicator of inventory turnover is used. The number of turnovers made by stocks for a given period is calculated using the following formula:

Works and services (minus and ) divided by the average value for the item "Stocks" of the second section of the balance sheet asset.

The acceleration of inventory turnover indicates an increase in the efficiency of inventory management, and the slowdown in inventory turnover indicates their accumulation in excessive amounts, ineffective inventory management. Indicators reflecting the turnover of capital, that is, the sources of formation of the organization's property, are also determined. So, for example, the turnover of equity capital is calculated according to the following formula:

The sales turnover for the year (net of value added tax and excises) is divided by the average annual cost of equity.

This formula expresses the effectiveness of the use of equity capital (authorized, additional, reserve capital, etc.). It gives an idea of ​​the number of turnovers made by the organization's own sources of activity per year.

The turnover of invested capital is the turnover on sales of products for the year (net of value added tax and excises) divided by the average annual cost of equity and long-term liabilities.

This indicator characterizes the effectiveness of the use of funds invested in the development of the organization. It reflects the number of turnovers made by all long-term sources during the year.

When analyzing the financial condition and the use of working capital, it is necessary to find out from what sources the financial difficulties of the enterprise are compensated. If the assets are covered by sustainable sources of funds, then the financial condition of the organization will be stable not only at this reporting date, but also in the near future. Sustainable sources should be considered own working capital in sufficient amounts, non-reducing balances of carry-over debt to suppliers on accepted settlement documents, the payment deadlines for which have not come, permanently carry-over debt on payments to the budget, a non-reducing part of other accounts payable, unused balances of special purpose funds (accumulation funds and consumption, as well as the social sphere), unused balances of targeted financing, etc.

If the organization's financial breakthroughs are covered by unstable sources of funds, it is solvent at the reporting date and may even have free cash in bank accounts, but financial difficulties await it in the short term. Unsustainable sources include sources of working capital that are available on the 1st day of the period (the date of the balance sheet), but are absent on dates within this period: non-overdue wage arrears, contributions to off-budget funds (in excess of certain stable values), unsecured debt to banks on loans for inventory items, debts to suppliers on accepted settlement documents, the payment deadlines for which have not come, in excess of the amounts attributed to sustainable sources, as well as debts to suppliers for uninvoiced deliveries, debts on payments to the budget in excess of the amounts attributed to stable sources of funds.

It is necessary to make a final calculation of financial breakthroughs (ie, unjustified spending of funds) and sources of coverage for these breakthroughs.

The analysis ends with a general assessment of the financial condition of the organization and the preparation of an action plan to mobilize reserves to accelerate the turnover of working capital and increase liquidity and strengthen the solvency of the organization. First of all, it is necessary to assess the security of the organization with its own working capital, their safety and use for their intended purpose. Then, an assessment is made of compliance with financial discipline, the solvency and liquidity of the organization, as well as the completeness of the use and security of bank loans and loans from other organizations. Measures are planned for more efficient use of both equity and borrowed capital.

The analyzed organization has a reserve for accelerating the turnover of working capital by 12.4 days (this reserve is noted in this paragraph). To mobilize this reserve, it is necessary to achieve the elimination of the causes that cause the accumulation of excess stocks of raw materials, basic materials, spare parts, other inventories and work in progress.

In addition, it is necessary to ensure the targeted use of working capital, preventing their immobilization. Finally, receiving payments from buyers for goods shipped to them that were not paid for on time, as well as the sale of goods that are in safe custody with buyers due to refusal to pay, will also speed up the turnover of working capital.

All this will help to strengthen the financial condition of the analyzed organization.

Indicators of availability and use of working capital

Circulating assets - are consumed in one production cycle, are materially included in the product and completely transfer their value to it.

The availability of working capital is calculated both on a certain date and on average for the period.

Indicators of the movement of working capital characterize its change during the year - replenishment and disposal.

Working capital turnover ratio

It is the ratio of the value of products sold for a given period to the average balance of working capital for the same period:

To turnover= Cost of goods sold for the period / Average working capital balance for the period

The turnover ratio shows how many times the average balance of working capital for the period under review turned around. In terms of economic content, it is equivalent to the rate of return on assets.

Average turnaround time

Determined from the turnover ratio and the analyzed period of time

Average duration of one revolution= Duration of the measurement period for which the indicator is determined / Working capital turnover ratio

Coefficient of fixing working capital

The value is inversely proportional to the turnover ratio:

Go to pinning= 1 / To turnover

Consolidation ratio = average working capital balance for the period / cost of goods sold for the same period

In terms of economic content, it is equivalent to the capital intensity indicator. The fixing coefficient characterizes the average cost of working capital per 1 ruble of the volume of products sold.

Need for working capital

The enterprise's need for working capital is calculated on the basis of the coefficient of fixing working capital and the planned volume of sales of products by multiplying these indicators.

Security of production with working capital

It is calculated as the ratio of the actual stock of working capital to the average daily consumption or the average daily need for it.

Accelerating the turnover of working capital helps to improve the efficiency of the enterprise.

According to the data for the reporting year, the average balance of working capital of the enterprise amounted to 800 thousand rubles, and the cost of products sold for the year in the current wholesale prices of the enterprise amounted to 7200 thousand rubles.

Determine the turnover ratio, the average duration of one turnover (in days) and the coefficient of fixing working capital.

• To turnover = 7200 / 800 = 9
• Average turnaround time = 365 / 9 = 40.5
• To fixing collective funds \u003d 1/9 \u003d 0.111

For the reporting year, the average balance of working capital of the enterprise amounted to 850 thousand rubles, and the cost of products sold for the year - 7200 thousand rubles.

Determine the turnover ratio and the coefficient of fixing working capital.

• Turnover ratio = 7200 / 850 = 8.47 turnovers per year
• Fixing coefficient = 850 / 7200 = 0.118 rubles of working capital per 1 ruble of sold products

The cost of sold products in the previous year amounted to 2,000 thousand rubles, and in the reporting year compared to the previous year it increased by 10% with a reduction in the average duration of one turnover of funds from 50 to 48 days.

Determine the average balance of working capital in the reporting year and its change (in%) compared to the previous year.

• The cost of products sold in the reporting year: 2000 thousand rubles * 1.1 = 2200 thousand rubles.

Average balance of working capital = Volume of sold products / Turnover ratio

To turnover \u003d Duration of the analyzed period / Average duration of one turnover

Using these two formulas, we derive the formula

Average balance of working capital = Volume of sold products * Average duration of one turnover / Duration of the analyzed period.

• Average balance Total average in the previous year = 2000 * 50 / 365 = 274
• Average balance Total average in the current year = 2200 * 48 / 365 = 289

289/274 = 1.055 In the reporting year, the average working capital balance increased by 5.5%

Determine the change in the average coefficient of fixing working capital and the influence of factors on this change.

To secure = average working capital balance / cost of goods sold

• To consolidation by group, base period = (10+5) / (40+50) = 15 / 90 = 0.1666
• To consolidate the group reporting period = (11 + 5) / (55 + 40) = 16 / 95 = 0.1684

Index of the general change in the coefficient of fixation

• \u003d SO (average balance)_1 / RP (sold products)_1 - SO_0 / RP_0 \u003d 0.1684 - 0.1666 \u003d 0.0018

Index of change in the coefficient of consolidation from changes in the average balance of working capital

• \u003d (SO_1 / RP_0) - (SO_0 / RP_0) \u003d 0.1777 - 0.1666 \u003d 0.0111

Index of change in the coefficient of fixing from changes in the volume of sold products

• \u003d (SO_1 / RP_1) - (SO_1 / RP_0) \u003d -0.0093

The sum of the individual indices must equal the overall index = 0.0111 - 0.0093 = 0.0018

Determine the total change in the balance of working capital, and the amount of released (involved) working capital as a result of changing the speed and changing the volume of sales.

• Average change in working capital balance = 620 - 440 = 180 (increased by 180)

General index of change in the balance of working capital (CO) \u003d (RP_1 * prod.1.turnota_1 / days in the quarter) - (RP_0 * prod.1.turnota_0 / days in the quarter)

• Duration of 1 turnover in the reporting quarter = 620*90/3000 = 18.6 days
• Duration of 1 turnover in the previous quarter = 440*90/2400 = 16.5 days

OS change index from changes in the volume of products sold

• \u003d RP_1 * prod.1ob._0 / quarter - RP_0 * prod.1ob._0 / quarter \u003d 3000 * 16.5 / 90 - 2400 * 16.5 / 90 \u003d 110 (increase in the balance of working capital due to an increase in the volume of sales )

Index of changes in fixed assets from changes in the turnover rate of working capital

• = RP_1*prod.1rev._1 / quarter - RP_1*prod.1rev._0/quarter = 3000*18.6/90 - 3000*16.5/90 = 70

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We will figure out how to act and where to find indicators. To produce goods, it is not enough to use the means of labor (machines, equipment) and involve workers.

It is also necessary to have source materials, raw materials, blanks, that is, everything that is needed when creating finished products in the production process. Work items needed.

To do this, you need to have money to buy everything you need from suppliers and pay staff for their work.

Objects of labor and money constitute the working capital of the company. But you need to determine the value of such an indicator, to know how to write off working capital.

Basic moments

First, let's find out what is meant by this economic expression and what regulations are relevant.

What it is

Working capital is called the totality of funds that turn around and cash circulation funds. Revolving funds are represented by:

• raw materials;
• basic and auxiliary materials;
• component parts;
• unfinished production facilities;
• container;
• other items of work.

Why is it needed

The turnover ratio of inventories reflects how many times the company used the average of the available balance of working capital in the analyzed period.

According to the balance sheet, current assets consist of:

• stocks;
• money;
• short-term financial investments;
• short-term receivables, taking into account the purchased values.

Values ​​can characterize what share of working capital and total assets and how effectively they are managed.

But it is worth remembering that the nuances of the industry in the production cycle are also taken into account. Working capital turnover is an important indicator.

Indeed, with the rapid turnover of the company's funds, the gap between the funds invested in the production process and the receipt is reduced.

The difference between working capital and fixed assets is that they are used in production cycles once, and they can transfer their price to the finished product.

Regulatory regulation

It is important to study the provisions:

1. PBU 6/01 according to.
2. Guidelines for accounting for fixed assets (), etc.

How to determine the turnover ratio of working capital

There are ready-made formulas that can be used to calculate turnover in any industry.

But in many cases it will not be possible to obtain an accurate result, since it is impossible to take into account all factors, and the management of each organization has different knowledge in the field of doing business.

What does it characterize

Thanks to the turnover ratio of working capital, you can determine how efficiently current assets are used. You should rely on the information that is in the balance sheet.

The turnover ratio is a financial indicator that allows you to determine how effectively the assets and liabilities are used.

It is able to show the business activity of the organization. If the asset turnover ratio is three, then the company receives revenue for the year, which exceeds the value of assets three times.

Since turnover rates may depend on the industry, it should be understood that in a trading company with a large amount of revenue, turnover will be greater.

If the industry is capital-intensive, then a lower value will be obtained. But it is not correct to believe that the turnover will show the efficiency of operations and profitability.

But when conducting a comparative analysis of the coefficients of the two organizations, you can see what a difference in the effectiveness of asset management.

If there is a higher debit turnover rate, it means that payments from buyers are collected efficiently.

The main goal pursued in the management of the company's assets (including working capital) is to increase profit on invested funds, ensuring a stable and sufficient solvency of the organization.

In order to achieve this goal, it is necessary to constantly have a certain amount on the account, which is actually withdrawn from circulation. These funds are used to make current payments.

Part of the amount should be placed as highly liquid assets. It is important to ensure that the optimal ratio of solvency and profitability is ensured.

To do this, support the size and structure of current assets, borrowed and own working capital.

What are the types

The most popular ratios in financial plan analysis:

Formula applied

What positions characterize the coefficient? The indicator depends on:

• from the duration of production cycles;
• qualifications of workers;
• type of activity;
• pace (performance indicators).

A greater value is typical for trade organizations, and a smaller value for capital-intensive scientific firms.
The formulas are directly proportional equations that are easy to understand.

If you are unable to deal with them, you can always contact a specialist who will help with the calculations.

So, the formula for determining the asset turnover ratio looks like this:

This formula is the most commonly used. Less commonly used is a formula in which the turnover ratio of working capital is calculated as the ratio of the number of days in a year to the turnover data.

Any value can be quickly found. For example, information about assets is in the balance sheet, and data on revenue is in the financial statements of the enterprise.

And here is the formula for the turnover ratio of current assets:

If the value is large, then we can talk about the growth of the enterprise. Current assets are not taken into account at the beginning / end of the period, which is analyzed. The indicator of the average annual balance is important.

The figures for the beginning of the year and the end must be divided by two. In addition to the turnover ratio of material assets, the turnover rate is also determined in days, which can take one turn.

So 365 days should be divided by the annual number of the turnover ratio. For example, the coefficient figure of 3 will show that the assets turn over in 121.7 days.

What are the features of calculating the company's capital turnover ratio? There are no definite rules, just like the average value.

Each organization displays its own values, which will be different (depending on the industry). But there is a direct relationship - the larger the coefficient, the greater the return on capital.

The formula is:

The company must be able to use intensively reserves and costs in its favor. Use the formula:

In the event that a large value is obtained, it means that the company does not have enough stocks. As a result, there are unnecessary waste.

The formula for determining the debit debt ratio:

There is no average. Everything will depend on the management and industry of the firm. The higher the number, the faster the company can pay off its debts.

When determining the loan debt turnover ratio, the following formula is used:

The result will show how intensively the firm repays its. There cannot be a certain general value of the coefficients.

They are analyzed in dynamics or compared with the performance of another company in the industry.

If the value is very low, and it cannot be justified by the characteristics of the industry, then the company has excess working capital. If the indicator increases, most often it is a plus for the company.

There will be a rapid turnover of mobile funds, there will be more proceeds. With the acceleration of turnover, other performance indicators improve.

The disadvantage is that if there are a lot of stocks, it is necessary to organize a place for storage, which will entail additional costs.

With the acceleration of turnover, productivity will increase, which means that workers will also increase.

Video: determining the efficiency of the use of working capital of an enterprise

This means that even before planning an increase in the coefficient, it is worth adjusting the potential profit and costs, which will also increase.

When can turnover go down? - If the duration of turnover increases due to an unjustified increase in inventories, the emergence of buyers' debts, disruptions in production.

After all, as a result, the production of goods will not be completed. There may also be such a reason - demand is decreasing, and finished goods are longer in warehouses. The volume of production is decreasing.

How to calculate by balance

To set the turnover ratio, you should take information from.

The available information will allow you to find out the value for the year. It will not be possible to find out any other period according to the balance sheet.

The current formula is:

Let's take an example. The final indicator (with line code 1200) at the end of 2015 is 400 thousand, and 2016 - 500 thousand. The amount of revenue (with line code 2110) at the end of 2015 is 1.5 million, and 2016 - 1.8 million.

The calculation is:
So, the value of the coefficient is 4, which means that the mobile fund is taken 4 times a year.

Calculation examples

For example, in a year the company sold 5,000 pieces of products. The cost of one unit is 180,000 rubles. The selling price is 15 percent more than the cost price.

The value of the average annual balance of working capital is 145,000,000 rubles. You should set the value of the coefficient, as well as find out how long one revolution lasts and what the load factor is.

So, for one ruble of goods sold, there are 14 kopecks. the value of working capital. One turn lasts:
Here is another example. The organization "Stepashka" in 2014 has a profit of 249,239 rubles. The asset turnover indicator at the beginning of the year is 48 thousand rubles, at the end - 34 thousand.

The effective functioning of any enterprise is impossible without the competent and rational use of working capital. Depending on the type of activity, the stage of the life cycle, or even the time of year, the amount of working capital for an organization may be different. However, it is the availability and competent use of these resources that determine how successful and long the activity of any economic entity will be.

In order to assess the literacy of the use of working capital of a company, there are many coefficients that analyze the speed of circulation, sufficiency, liquidity and many other equally important characteristics. One of the most important indicators necessary to determine the financial condition of the organization is the turnover ratio of working capital.

Turnover ratio (K about), or the rate of turnover, shows how many times during the study period the company is able to fully wrap its own working capital. Thus, this value characterizes the efficiency of the firm. The larger the value obtained, the more successfully the company uses its available resources.

Formula and calculation

The turnover ratio shows the number of revolutions that make working capital for the considered period of time. It is calculated as:

Where:

• Q p is the volume of products sold in wholesale prices of the organization, excluding VAT;
• F ob.av. - the average balance of working capital found for the study period.

If we recall the approximate form of the cycle of circulation of funds in an enterprise, it turns out that the money that the organization invests in the work of its company returns to it after some time in the form of finished products. The company sells these products to its customers and again receives a certain amount of money. Their value is the income of the organization.

Thus, the general scheme "money-goods-money" implies a cyclical nature of the company's activities. The turnover ratio in this case shows how many such cycles the organization's funds can make in a certain period of time (most often in 1 year). Naturally, for the efficient and fruitful operation of the enterprise, it is necessary that this value was as high as possible..

Required indicators for calculation

The turnover ratio of working capital can be determined using the data presented in the financial statements of the organization. The quantities needed to determine it are shown in the first and second forms of financial statements.

So, in the general case, the volume of sales is calculated as the revenue received by the organization in one cycle (since in most cases an annual coefficient is used for analysis, in the future we will take into account the time period t = 1). Revenue for the specified period is taken from the income statement (former income statement), where it is shown in a separate line, as the amount received by the enterprise from the sale of works, goods or services.

The average balance of working capital is found from the second section of the balance sheet and is calculated as:

Where F 1 and F 0 are the values ​​of the company's working capital for the current and past period of time. Note that if the calculations use data for 2013 and 2014, then the resulting coefficient will represent the rate of turnover of funds specifically for 2013.

In addition to the turnover ratio in economic analysis, there are other quantities that analyze the speed of circulation of the organization's working capital. Many of them are also closely related to this indicator.

So, one of the values ​​accompanying the turnover ratio is duration of one revolution (T about). Its value is calculated as the quotient of dividing the number of days corresponding to the analyzed period (1 month = 30 days, 1 quarter = 90 days, 1 year = 360 days) by the value of the turnover ratio itself:

Based on this formula, the duration of one revolution can also be calculated as:

Another important indicator used in the analysis of the financial condition of the organization is load factor of funds in circulation K load. This indicator determines the amount of working capital required to receive 1 ruble of proceeds from the sale of products. In other words, the coefficient shows how many percent of the organization's working capital falls on one unit of the final result. Thus, in another way, the load factor can be called the capital intensity of working capital.

It is calculated using the following formula:

As you can see from the methodology for calculating this indicator, its value is the inverse of the value of the turnover ratio. And this means that the lower the value of the load indicator, the higher the efficiency of the organization.

Another generalizing factor in the efficiency of the use of working capital is the value profitability (R ob.av.). This coefficient is characterized by the amount of profit received for each ruble of working capital, and shows the financial efficiency of the organization. The formula for its calculation is similar to the values ​​​​used to find the turnover ratio. However, in this case, instead of the proceeds from the sale of products, the numerator uses the profit of the enterprise before tax:

Where π is profit before tax.

Also, as in the case of the turnover ratio, the greater the value of return on capital, the more financially stable the company's activities.

Turnover ratio analysis

Before turning to the analysis of the turnover ratio itself and looking for ways to increase the efficiency of the organization, let's define what is generally meant by the concept of "working capital of the company".

The working capital of an enterprise is understood as the amount of assets that have a useful life of less than one year. Such assets may include:

• reserves;
• unfinished production;
• finished products;
• cash;
• short-term financial investments;
• accounts receivable.

In most cases, the turnover ratio in the company has approximately the same value over a long period of time. This value may depend on the types of the company's main activities (for example, for trade enterprises this indicator will be the highest, while in the field of heavy industry its value will be quite low), its cyclicality (some firms are characterized by a surge in activity in certain seasons) and many other factors.

However, in general, in order to change the value of this ratio and increase the efficiency of using the company's assets, it is necessary to correctly approach the policy of working capital management.

Thus, the reduction of stocks can be achieved through a more economical and rational use of resources, reducing the material intensity of production and the magnitude of losses. In addition, a significant improvement can be achieved through more efficient supply management.

The reduction in the value of work in progress is carried out by rationalizing the production cycle and reducing the cost of inventories. A reduction in the amount of finished products in stock can be achieved with the help of a more advanced logistics and aggressive marketing policy of the organization.

Note that a positive impact on even one of the above values ​​already has a significant impact on the turnover ratio. In addition, it is possible to achieve an increase in the efficiency of the use of working capital in an enterprise in indirect ways. Thus, the value of the indicator will be higher with the growth of the organization's profit and sales volumes.

If, when constructing the dynamics of the turnover ratio over a long period of time, one can note a stable decrease in its value, this fact may be a sign of a deterioration in the financial condition of the company.

Why might it go down?

There are several reasons for reducing the value of the turnover ratio. Moreover, its value can be influenced by both external and internal factors. For example, if the general economic situation in the country worsens, the demand for luxury goods may fall, the appearance on the market of new models of electrical engineering will reduce the demand for old ones, and so on.

There can also be several internal reasons for the decrease in the turnover rate. Among them should be highlighted:

• errors in the management of working capital;
• logistics and marketing errors;
• an increase in the company's debt;
• use of outdated production technologies;
• change in the scope of activities.

Thus, most of the reasons for the deterioration of the situation at the enterprise associated with management errors and low qualification of workers.

At the same time, in some cases, the value of the turnover ratio may decrease due to the transition to a new level of production, modernization and the use of new technologies. In this case, the value of the indicator will not be associated with the low efficiency of the company.

Consider a certain organization "Alpha". After analyzing the company's activities in 2013, we learned that the proceeds from the sale of products at this enterprise amounted to 100 thousand rubles.

At the same time, the amount of working capital was 35 thousand rubles in 2013 and 45 thousand rubles in 2012. Using the data obtained, we calculate the asset turnover ratio:

Since the resulting coefficient is 2.5, we can note that in 2013, the duration of one turnaround cycle for Alpha was:

Thus, one production cycle of the Alfa enterprise takes 144 days.

Let's figure it out. This ratio is included in the group of indicators of business activity of the enterprise (turnover). The coefficients from this group show the intensity (rate of turnover) of the use of assets or liabilities. With the help of them you can find out how actively the company conducts its activities. Hence the second name of the group - Business activity. In foreign literary sources, this coefficient is called Inventory turnover.

Inventory turnover ratio. economic sense

The coefficient shows the effectiveness of inventory management at the enterprise. It determines how many times during the analyzed period, the company used its stocks. In other words, the ratio shows the rate at which inventory is produced and released from the company's warehouse. This is an indicator of the effectiveness of the purchasing department (warehouse) and the sales department.

Inventory turnover analysis

How to analyze the value of this coefficient? If the value is decreasing (▼), it means that:

• the company accumulates excess inventory,
• The company has poor sales.

If the value of the coefficient increases (▲), then this indicates that:

• the company increases inventory turnover,
• sales increase.

High values ​​of this coefficient are also undesirable for the enterprise, as this is often associated with a constant shortage of goods in warehouses, which leads to loss of customers and interruptions in the production process. It is necessary to find the golden edge for each enterprise.

Inventory turnover ratioand its synonyms

The coefficient has synonyms that are often found in the economic literature. So that you do not have difficulties with the interpretation of the coefficients, below I will give synonyms for the inventory turnover ratio:

• Inventory turnover ratio,
• inventory turnover,
• inventory turnover,
• Inventory turnover ratio,
• The turnover ratio of material assets,
• inventory turnover ratio,

Inventory turnover ratio. Calculation formula

The formula for calculating the inventory turnover ratio is as follows:

Inventory Turnover Ratio = Sales Revenue/Average Inventory

Cost of goods sold is sometimes used instead of Sales Revenue.

To calculate the coefficient, it is sufficient to have public reporting of the enterprise. According to RAS, the calculation formula is as follows:

Inventory turnover ratio = line 2110 / (line 1210np. + line 1210kp.) * 0.5

Np. – the value of line 1210 at the beginning of the period.
Kp. - the value of line 1210 at the end of the period.

Don't forget to divide the sum of the beginning and end of the period stocks by 2 to find the average value of the company's stocks.

The reporting period may not be a year, but, for example, a month, a quarter.

According to the old form of accounting, the calculation formula will be as follows:

Inventory turnover ratio \u003d line 10 / (line 210np. + line 210kp.) * 0.5

Sometimes, as mentioned above, instead of Revenue (p. 10), Cost of goods sold (p. 20) is used.

Convert Inventory Turnover Ratio to Inventory Turnover

Along with the coefficient, the Inventory Turnover indicator (inventory turnover period) is used. It reflects the number of days required for the transformation of stocks into the money supply. The formula for the transformation of the inventory turnover ratio in the inventory turnover period is as follows:

Inventory Turnover (in days) = 360 / Inventory Turnover Ratio

Sometimes 365 days are used in the formula instead of 360. The economic meaning of inventory turnover is that it determines how many days the company will have enough stock in the warehouse.

Two approaches to calculating the inventory turnover ratio under IFRS

There are two approaches to calculating the ratio according to IFRS (International Financial Reporting System) in the first approach, the formula takes into account Revenue, and in the second - Cost of goods sold. As you most likely noticed, in Russian practice there are also these two approaches to calculating the coefficient.

I will give everything in the form of a comparative table.

The difference in results between the two approaches will be significant. This is due to the fact that the Revenue significantly exceeds the cost of goods sold.

Working capital cycle (cash cycle,cashconversioncycle)

Inventory turnover is closely related to working capital cycle. What is the money cycle? This is the number of days that elapses from the moment of purchase of raw materials and materials for production with cash and until the moment of sale of manufactured goods. The working capital cycle (cash cycle) is measured in days and determines the effectiveness of the company's working capital management.

Formula for calculating the working capital cycle:

Working Capital Cycle (Money Cycle) = Inventory Turnover (days) + Accounts Receivable Turnover (days) – Accounts Payable Turnover (days)

The shorter the cycle, the faster the company returns money from turnover. The optimal value of the cycle does not exist, it all depends on industry characteristics.

Video lesson: “Calculation of key indicators of business activity for OAO Gazprom”

Inventory turnover ratio. Calculation on the example of OJSC ALROSA

Calculation of the inventory turnover ratio for OAO ALROSA. Balance

Calculation of the inventory turnover ratio for OAO ALROSA. Financial results

Data on the balance sheet of OJSC ALROSA are taken from the official website of the company. Calculate the inventory turnover ratio for the year. Let's take 4 periods 3.4 for 2013 and 1.2 for 2014. This will cover one calendar year.

Calculation of inventory turnover ratios for OJSC ALROSA:

Inventory turnover ratio 2013-4 = 138224744/(43416382+39598628)*0.5 = 3.3
Inventory turnover ratio 2014-1 =41503568/(39598628+37639412)*0.5 = 1
Inventory turnover ratio 2014-2 =81551030/(37639412+41581870)*0.5 = 2

The values ​​of the inventory turnover ratio for OJSC ALROSA are not constant, there is no clear trend towards growth or fall. For a more detailed analysis, it is desirable to determine the average value of the coefficient for the industry.

Inventory turnover ratio. Standard

There is no specific standard value for the coefficient. Each industry will have its own average coefficient values. The coefficient analysis can be carried out as follows:

• Dynamic analysis. Calculate the coefficient values ​​for our enterprise for several periods and build a time series of its changes. This will allow you to determine the trend of its change.
• Comparative analysis. Calculate the average value of the coefficient for the industry, as well as highlight the leader's enterprise by the coefficient. This will make it possible to determine our place in comparison with the enterprises of the industry as a whole.

Summary

Let's summarize the analysis of the inventory turnover ratio. It shows the intensity of use of stocks by the enterprise. The higher this ratio, the more efficiently the company works.