Financial analysis law report. How to optimize the structure of liabilities How to calculate the cost cycle of days

2.4. Turnover analysis

The purpose of the turnover analysis is to assess the company's ability to generate income by making a turnover of Money - Goods - Money.

The analysis of turnover makes it possible to supplement the research of the structure of the Balance on the characteristics of the conditions of material supply, sales of finished products, conditions of settlements with buyers and suppliers.

Turnover analysis includes:

• analysis of current assets turnover;
• analysis of the turnover of current liabilities;
• clean cycle analysis.

When analyzing the turnover of an enterprise (organization), indicators are used that are called turnover ratios.

Asset turnover ratio shows how many times the asset under consideration has “turned around” during the period.

where Asset (average)- the average value of the asset under consideration in the period, monetary units.

The average value of an asset is determined by the formula:

Using the above formula, the turnover of the organization's permanent, current and total assets is determined (table 8, page 195).

The growth of the turnover ratio in dynamics indicates an increase in the efficiency of property use in terms of generating income (profit). The asset turnover rate is directly related to profitability indicators.

Analysis of the dynamics of changes in turnover indicators allows you to obtain information characterizing the efficiency of the enterprise. However, the absolute value of the turnover ratio is difficult to interpret.

For example, if during the year the current assets turnover ratio increased from 1.4 to 2, this is a positive trend. However, it is difficult to say whether a value equal to 2 is the optimal, acceptable or critical turnover indicator for the enterprise.

From the point of view of economic interpretation, the periods of turnover of assets (current and permanent) and current liabilities, which are calculated in days, are more informative. Of greatest interest is the calculation of the periods of turnover of current assets and current liabilities, since it allows you to characterize the principles of management working capital organizations (conditions of material supply, sales, conditions of mutual settlements with buyers and suppliers).

The turnover period of each of the elements of current assets reflects the length of the period (in days) during which money is "tied" in a given type of assets. Describing in more detail the process of asset turnover Money - Commodity - Money, you can get the picture shown in Figure 9.

Cash in the course of the turnover, successive stages go through. The first stage is advances to suppliers, which are sequentially turned into inventories, work in progress, finished goods, receivables, and then new money (for various enterprises some stages in the presented chain may be missing). The periods of turnover give a temporal characteristic of each of the indicated stages.

The periods of turnover of individual elements of current assets have a real economic interpretation (table D).

Table D

Economic interest is not only the periods of turnover of individual components of current assets, but also their total value.

The sum of the periods of turnover of individual elements of current assets, excluding cash, is the cost cycle of the enterprise.

The longer the cost cycle, the longer the period of time money is “tied” in current assets, the more distant is the moment of receiving new money (Money).

It is not by chance that the expensive cycle has received such a name. The formation of reserves and the implementation of costs requires appropriate sources of funding.

Financing of production activities can be carried out at the expense of sources arising from the conduct of production activities, and sources external to the production process.

In this case, external sources of financing mean an increase in the company's equity capital, the attraction of loans and borrowings.

Sources of financing arising from the conduct of production activities are current debts to suppliers (accounts payable), current debts to the budget and personnel, as well as advance payments from buyers. The current debt to the budget (arising from the established periodicity of tax payments) and the current wage arrears (arising from the accepted frequency of remuneration in the organization) constitute the stable liabilities of the organization.

To characterize the sources of financing arising from the conduct of production activities, the periods of turnover of the elements of current liabilities are calculated (table 8, p. 195).

The turnover period of each of the elements of current liabilities reflects the length of the period (in days) during which the organization has the ability to dispose of this source of funding (table E).

Table E

The sum of the periods of turnover of the elements of current liabilities is called the credit cycle of the enterprise.

The above statement is true if the periods of turnover of individual components of current liabilities have satisfactory values, that is, the organization does not have (does not create) excess debts to suppliers, budget, personnel.

The difference between the cost cycle and the credit cycle is called clean cycle.

The net cycle is an indicator that characterizes the organization of financing of production activities. The net cycle shows the part of the cost cycle not funded by participants production process(Fig. 9, page 60).

The larger the net cycle, the less current assets are financed by direct participants in the production process (the more current assets that are financed from external sources of financing in relation to the production process - equity capital gains, loans).

A negative value of the net cycle means that loans from suppliers and buyers in excess cover the need for financing the production process and the company can use the resulting “surplus” for other purposes, for example, to finance permanent assets. This situation is most favorable for the enterprise.

If the negative value of the net cycle is large, we can talk about the emergence of the risk of failures in the repayment of accounts payable and the fulfillment of obligations on the advances provided by buyers.

The calculation of the periods of turnover of the elements of current assets and current liabilities is carried out according to the general formula

Calculation base (denominator of formula 8) for various elements current assets and liabilities is different (table F).

Table F

The average value of the elements of current assets and current liabilities is determined according to the data of the aggregated balance sheet. Information on sales revenue and costs of products sold is presented in the report on financial results(form number 2).

Note that to calculate the periods of turnover, it is necessary that

• information of form no. 2 was presented for the period (not on an accrual basis);
• all indicators used in the calculations refer to the same time period.

The period of inventory turnover (T turnover of stocks of materials, days) is calculated by the formula

where
SB of sales - the cost of sales of products (works, services) in the analyzed period, monetary units. It is determined according to the data of the statement of financial results;
Stock of materials (average) - the average amount of stocks of materials in the analyzed period, monetary units. Determined according to the data of the aggregated Balance;
The average amount of reserves is determined by the formula:
(Stocks at the beginning of the period + Stocks at the end of the period) / 2
Int - the duration of the analyzed period (analysis interval) in days. For example, quarterly reporting corresponds to the analysis interval of 90 days, annual - 360 days.

To more accurately determine the turnover period of stocks of materials, it is necessary to subtract the "stock-forming" costs from the total cost of goods sold. The "stock-forming" elements include, for example, depreciation charges, wages, and electricity. The purpose of this adjustment is to estimate the value of the average daily material costs associated with the production of products sold.

When analyzing the principles of inventory management (analysis of inventory turnover), it is advisable to single out the amount of inventory, the amount of which can actually be controlled. Unused materials, the so-called "dead stock", are not renewable (purchased again). For this reason, they should be excluded from the calculation of the inventory turnover period. That is, the total amount of stocks of materials, reflected in the aggregated balance sheet, must be adjusted for the amount of unused stocks (previously purchased and not used in the production process).

With the adjustment, the formula for calculating the turnover period for material stocks is transformed as follows:

where
SB of sales - the cost of sales of products (works, services) in the analyzed period, monetary units;
share of faults app. - the share of stocks in the warehouse not used in the production process,%. They are sometimes called "dead stock";
Int - the duration of the analyzed period in days;
"Stock-forming" costs - depreciation charges, wages, contractor services, energy, depreciation, etc., attributed to the sold products of a given period, monetary units;

The calculation of the turnover period of stocks of materials can be performed without adjusting for the amount of depreciation and wages... The calculation result is correct, but it must be remembered that the real turnover period will be slightly longer.

Enterprises with a small proportion of unused inventory can ignore the adjustment factor indicated as [* (1-fraction of unused inventory)].

The turnover period of work in progress (T turnover of work in progress, days) and finished goods (T turnover of finished goods and goods) are calculated using similar formulas

The average value of work in progress and finished goods in each of the analysis intervals is determined according to the data of the aggregated balance sheet.

If the balance sheet of the enterprise takes into account "frozen" work in progress and finished products in significant volumes, it is necessary to supplement the numerators of the formulas with factors (1-share of "frozen" work-in-progress) and (1-share of "frozen" finished goods in stock).

In this case, “frozen” means work in progress and finished goods related to products that are currently discontinued.

When determining the period of turnover of stocks of materials, commercial and administrative costs are not included in the calculations, since in most cases these costs are not "stock-forming" (do not form material stocks). From the point of view of payment, administrative and commercial expenses are equivalent to other costs, therefore they should be taken into account when calculating the period of turnover of accounts payable and advances to suppliers (designated as T turnover of accounts payable and T turnover of advances to suppliers, respectively).

where
Total sales costs - the total value of a / s sales of products, commercial and administrative expenses in the analyzed period, monetary units
Int - the duration of the analyzed period (analysis interval) in days.

The average value of advances to suppliers and accounts payable is determined according to the data of the aggregated balance sheet. The average value is calculated according to the formula (Value at the beginning of the analysis period + Value at the end of the analysis period) / 2.

The turnover periods for advances to suppliers and payables can be calculated without adjusting for depreciation and wages. The calculation result is correct, but it must be remembered that the real turnover period will be slightly longer.

where Revenue from sales (for the period) is the amount of revenue from the sale of products (works, services) received in the given analysis interval, den. units It is determined according to the data of the statement of financial results;
Int - the duration of the analyzed period (analysis interval) in days;

The average value of advances from buyers and receivables is determined according to the data of the aggregated balance sheet. The average value is calculated according to the formula (Value at the beginning of the analysis period + Value at the end of the analysis period) / 2.

If there is a significant share of uncollectible receivables in accounts receivable, it is necessary to exclude it from the calculation of the invoice turnover period. The purpose of this adjustment is to estimate the real value of the "circulating" debt.

where is the share of hopelessness. ДЗ - the share of bad debts (the probability of receipt of which is close to zero) in the total amount of accounts receivable for a given period,%.

The periods of turnover of debts to the budget and wages (the period of turnover of stable liabilities) are combined in the period of turnover of other current liabilities. Its value can be determined expertly, taking into account the frequency of payment of taxes and wages (direct formula calculation according to the Balance Sheet and Form No. 2 is difficult).

Interpretation of the turnover period of other current assets is difficult, since the position “Other current assets” combines elements that are not homogeneous in terms of economic meaning. The turnover period of other current assets is determined in the same way as the turnover period of inventories (the numerator of the formula reflects the average value of other current assets).

When calculating the periods of turnover of receivables and payables, advances from buyers and advances to suppliers, cash payments should be excluded from the total amount of proceeds from sales and costs of selling products. Such an adjustment is necessary for organizations, a significant proportion of whose settlements are carried out in cash.

The influence of working capital on the financial condition of an organization can be represented as a diagram:

It should be noted that the change in absolute liquidity is affected by a change in working capital (not an absolute value). At the same time, a change in working capital leads to a one-time change in absolute liquidity.

Definition

Money cycle, or working capital cycle(cash conversion cycle, operating cycle) is the period of circulation of funds from the moment of acquiring resources (raw materials, materials, work force) and until the sale of the finished product and receiving money for it. This period is expressed in days and reflects the effectiveness of the organization's working capital management.

Calculation (formula)

The cash flow cycle is represented as the sum of three turnover indicators, expressed in days: inventory turnover, accounts receivable turnover and accounts payable turnover:

Money cycle (in days) = Inventory turnover in days + Accounts receivable turnover in days - Accounts payable turnover in days

Normal value

A short cash cycle allows the organization to quickly return the money invested in current assets. The smaller the cycle, the better for the organization. However, the specific optimal duration of the monetary cycle strongly depends on the industry and the characteristics of the enterprise. There are even cases when an enterprise has a negative money cycle indicator. For example, this occurs among enterprises that have such strong market positions that they can dictate terms to both buyers (shortening the payment period for their products) and suppliers (getting them a deferred payment).

Turnover analysis is one of the leading areas of analytical study financial activities organizations. Based on the results of the analysis carried out, assessments of business activity and the effectiveness of asset and / or capital funds management are made.

Today, the analysis of working capital turnover raises a lot of controversy between practical economists and theoretical economists. This is the most vulnerable point in the entire method of financial analysis of the organization's activities.

What characterizes the analysis of turnover

The main purpose for which it is carried out is to assess whether the company is able to make a profit by making a turnover of "money-commodity-money". After the necessary calculations, the conditions for material supply, settlement with suppliers and buyers, sales of manufactured products, etc. become clear.

So what is turnover?

This is an economic value that gives a characteristic of a certain time period during which the full circulation of money and goods passes, or the number of these calls for a given time period.

So, the turnover ratio, the formula of which is given below, is equal to three (the analyzed period is a year). This means that the enterprise in a year of operation rescues a second more money than the value of its assets (that is, they turn over three times in a year).

The calculations are simple:

K about = sales proceeds / average assets.

It is often required to know the number of days in which one revolution takes place. For this, the number of days (365) is divided by the turnover rate for the analyzed year.

Frequently used turnover ratios

They are needed to analyze the business activity of the organization. The indicators of the turnover of funds show the intensity of the use of liabilities or certain assets (the so-called rate of turnover).

So, when analyzing the turnover, the following turnover ratios are used:

Equity capital of the enterprise,

Working capital assets,

Full assets,

Stocks,

Debts to creditors,

Accounts receivable.

The higher the calculated turnover ratio of complete assets, the more intensively they work and the higher the indicator of business activity of the enterprise. Industry specifics do not always have a positive effect on turnover. So, in trade organizations through which large amounts of money pass, the turnover will be high, while in capital-intensive enterprises it will be much lower.

When comparing the turnover ratios of two similar enterprises belonging to the same industry, one can see a difference, sometimes significant, in the efficiency of asset management.

If the analysis shows a large ratio of accounts receivable turnover, then there is a reason to talk about the significant efficiency of collection of payments.

This coefficient characterizes the speed of movement of working capital from the moment of receipt of payment for material values ​​and ending with the return of funds for goods (services) sold to bank accounts. The amount of circulating assets is the difference between the total amount of circulating assets and the balance of funds in the bank on the accounts of the enterprise.

In the case of an increase in the rate of turnover with the same volume of goods (services) sold, the organization will use smaller amounts of working capital. From this we can conclude that material and monetary resources will be used more efficiently. Thus, the working capital turnover ratio indicates the entire set of processes economic activity, such as: a decrease in capital intensity, an increase in productivity growth rates, etc.

Factors affecting the acceleration of the turnover of working capital

These include:

Reduction of the total time spent on the technological cycle,

Improvement of technologies and production process,

Improving the supply and marketing of goods,

Transparent payment and settlement relations.

Money cycle

Or, as it is also called, working capital is the time period of cash turnover. Its beginning is the moment of acquisition of labor, materials, raw materials, etc. Its end is the receipt of money for the goods sold or services provided. The value of this period shows how effective the management of working capital is.

A short money cycle (a positive characteristic of the organization's activities) makes it possible to quickly return funds invested in current assets. Many enterprises with a strong position in the market, after analyzing the turnover, receive a negative working capital ratio. This is explained, for example, by the fact that such organizations have the ability to impose their conditions on both suppliers (receiving various payment delays) and buyers (significantly reducing the payment period for the goods (services) supplied).

Inventory turnover

This is the process of replacing and / or complete (partial) renewal of stocks. It passes through the transfer of material values ​​(that is, the capital invested in them) from the group of stocks into the process of production and / or sale. The inventory turnover analysis makes it clear how many times the inventory balance was used during the billing period.

Inexperienced managers create excessive stocks for reinsurance, not thinking about the fact that this surplus leads to a "freeze" of funds, over-spending and reduced profits.

Economists advise avoiding such low-turnover reserves. And instead, by accelerating the turnover of goods (services), free up resources.

The inventory turnover ratio is one of the important criteria for assessing the activities of an enterprise.

If the calculations show a ratio that is too high (in comparison with the average or the previous period), then this may mean a significant lack of reserves. If, on the contrary, the stocks of goods are not in demand or are very large.

It is possible to characterize the mobility of funds invested in the creation of stocks only by calculating the stock turnover ratio. And the higher the business activity of the organization, the faster the money is returned in the form of proceeds from the sale of goods (services) to the company's accounts.

There are no generally accepted norms for the turnover ratio. They are analyzed within the framework of one industry, and the ideal option is in the dynamics of a single enterprise. Even the slightest decrease in this ratio indicates excessive stockpiling, ineffective warehouse management, or the accumulation of unusable or obsolete materials. On the other hand, this high indicator does not always characterize well the business activity of the enterprise. Sometimes this speaks of depletion of reserves, which can cause disruptions in the technological process.

Affects the inventory turnover and the activities of the marketing department of the organization, since high profitability sales entails a low turnover rate.

Accounts receivable turnover

This ratio characterizes the rate of repayment of accounts receivable, that is, it shows how quickly the organization receives payment for the goods (services) sold.

It is calculated for a separate period, most often for a year. And it shows how many times the organization received payments for products in the amount of the average outstanding balance. He also describes the policy of selling on credit and the efficiency of working with customers, that is, how effectively receivables are collected.

The receivables turnover ratio does not have standards and norms, since it depends on the industry and technological features of production. But in any case, the higher it is, the faster the receivables are covered. At the same time, the efficiency of the enterprise is not always accompanied by a high turnover. For example, sales of products on credit give a high balance of accounts receivable, while the rate of its turnover is low.

Accounts payable turnover

This coefficient shows the relationship between the amount of money that needs to be paid to creditors (suppliers) by the agreed date and the amount spent on purchases or on the purchase of goods (services). The calculation of the turnover of accounts payable makes it clear how many times its average value was repaid during the analyzed period.

Financial stability and solvency decrease with a high proportion of accounts payable. While it also gives the opportunity for the entire period of its existence to use "free" money.

The calculation is simple

The benefit is calculated as follows: the difference between the amount of interest on the loan, equal to the amount of debt (that is, a hypothetically taken loan) for the time it is on the balance sheet of the organization, and the amount of accounts payable itself.

A positive factor in the activity of the enterprise is the excess of the ratio of accounts receivable over the ratio of accounts payable. Lenders give preference to a higher turnover ratio, but it is beneficial for the enterprise to keep this ratio at a lower level. After all, unpaid accounts payable is a free source for financing current activities organizations.

Resource efficiency, or asset turnover

It makes it possible to calculate the number of capital turnovers for a particular period. This turnover ratio, the formula exists in two versions, gives a characteristic of the use of all assets of the organization, regardless of the source of their receipt. It is also important that, only by determining the coefficient of resource productivity, you can see how many rubles of benefit are accounted for for each ruble invested in assets.

The asset turnover ratio is equal to the quotient of dividing the proceeds by the value of assets on average for the year. If it is necessary to calculate the turnover in days, then the number of days in a year must be divided by the asset turnover ratio.

The leading indicators for this category of turnover are the period and rate of turnover. The latter is the number of capital turnovers of the organization for a certain period of time. This interval is understood as the average period for which the funds invested in the production of goods or services are returned.

Asset turnover analysis is not based on any norms. But the fact that in capital-intensive industries the turnover rate is much lower than, for example, in the service sector, is definitely understandable.

Low turnover may indicate insufficient efficiency in working with assets. Keep in mind that ROIs also affect this category of turnover. Thus, high profitability entails a decrease in asset turnover. And vice versa.

Equity capital turnover

It is calculated to determine the rate of the organization's equity capital for a given period.

Capital turnover own funds organization is designed to characterize various aspects of the financial activity of the enterprise. For example, from an economic point of view, this coefficient characterizes the activity of the money turnover of the invested capital, from the financial point of view, the rate of one turnover of the invested funds, and from the commercial point of view, the surplus or insufficient sales.

If this indicator shows a significant excess of the level of sales of goods (services) over the invested funds, then, as a result, the growth of credit resources will begin, which, in turn, makes it possible to reach the limit beyond which the activity of creditors increases. In this case, to own capital the ratio of liabilities increases and the credit risk increases. And this entails the inability to pay these obligations.

Low capital turnover of own funds indicates their insufficient investment in the production process.

Added: 09/21/2016

Financial planning

Share:

In the process of calculating the turnover of any current asset in the context of total revenue, it is necessary to pay attention to three key indicators:

• asset turnover minus cash;
• turnover of liabilities minus accounts payable debt;
• the difference between the first and second value.

The first indicator, which is the sum of the working periods of all elements of current assets (with the deduction of cash), is called the cost cycle. The higher its value, the more time the enterprise's funds are in a “tied” state, the longer it takes to transform them into “new money”.

The name of the cost cycle can be deciphered quite easily. To carry out production activities, the company has to look for sources of financing for certain costs, including for the formation of reserves. The amount of required funding will increase in proportion to the increase in the cost cycle period. At the same time, sources of financing can appear directly in the production process, or be attracted from outside. In this case, external sources are considered not only borrowed funds, but also financing by increasing equity capital.

With the growth of the cost cycle, one can state a gradual deterioration in the management of existing working capital and a decrease in the overall efficiency of using the current working capital available to the enterprise. A direct consequence of the growth in the cost cycle is a decrease in the level of return on equity. Accordingly, its reduction will help to increase profitability.

Generally speaking, an increase in the cost cycle will inevitably worsen the financial stability of the enterprise. The company will not be able to ensure the growth of current assets without speeding up the buildup of liabilities, and in the long term, this practice may turn out to be too burdensome.

A practical example. Effective management of working capital.

The enterprise, the financial indicators of which are shown in the table below, has been experiencing an increase in the cost cycle over a long period of time. Expected result: the situation with current capital management is getting worse and the quality of working capital management is slightly reduced. The deterioration in the manageability of the current assets at the disposal of the enterprise is most clearly manifested in the sections of finished products and accumulated receivables: buyers accumulate debts for the supplied products, and the share of products deposited in the warehouse has also increased.

Despite maintaining profitability, the company has seen a decline in its return on equity. It was caused by an increase in the period of asset turnover, which in turn influenced the growth of the cost cycle. The company is in dire need of additional funding. To find out whether it is necessary to increase financing of working capital from external sources, it is necessary to analyze the indicators of short-term liabilities.

Short-term liabilities

When carrying out production activities, enterprises often attract short-term debt obligations related to current liabilities as sources of financing. This category includes the following sources:

• current debts to suppliers;
• current debts to staff and the budget;
• received advance payments.

Sustainable liabilities include the company's temporary tax arrears and current pay deferrals. Both types of liabilities are due to the recurring nature of tax payments and payroll.

The turnover of each category of short-term liabilities, after adding up, forms a credit cycle. When calculating the credit cycle, the turnover of short-term loans is not taken into account. The increase in the credit cycle indicates a more efficient use of external financial sources in the implementation of current activities.

If the credit cycle shows a noticeable increase, the conditions for capital management change towards favorable ones - the number of sources of financing for the needs of the production process increases. However, this statement is correct only if the turnover of each element of current liabilities is at a comparatively acceptable level and the enterprise does not have debts that exceed the norm to the budget, suppliers and personnel.

A practical example. Effectiveness of the company's use of short-term liabilities

V this example the increase in the credit cycle by the company was clearly demonstrated. The main reason for the growth was the increase in the period of turnover of advance payments and accounts payable. The latter arose due to the consistent increase in the average period of grace periods for the settlement of invoices from buyers, in particular, they increased sharply in the last reporting period. The company also increased the amount of advance payments received as an advance payment from buyers, which allowed it to significantly improve the terms of shipment.

If you examine the original balance sheet of the company, you will find that the increase in other elements of current liabilities was made possible by the arrears of dividend payments to the owners of the company. It is the debts to the founders that have become real financial sources to support production activities in the last period. However, to all appearances, in the next period this debt will be paid off, and the company's management will have to find another source of funding.

When comparing the dynamic indicators of the credit cycle, we can conclude that its increase was a forced measure, serving to provide current assets with financing in full and to prevent the occurrence of cash gaps. The increase in delays in payment of invoices by buyers was, in turn, offset by delays in settlements with suppliers and other counterparties.

Increase in accounts payable - negative or positive trend?

If a company finds itself in a situation where a shortage of working capital threatened to result in cash shortages, accounts payable can significantly improve its financial position. At the same time, resources in the form of direct loans are not attracted and the costs of servicing interest do not arise, which can definitely be interpreted as a positive circumstance. However, overdue supplier invoices over time can lead to the need to pay fines, penalties, interest, and even lead to the breakdown of business relations with the counterparty. Therefore, you should monitor that deferred bills do not turn into chronic non-payments and do not create problems in the future.

The decrease in the base indicator of liquidity arises not only due to the increased accounts payable and its reduction will have almost no effect on liquidity. Since both short-term loans and accounts payable belong to the category of current liabilities, regardless of which indicator has increased, the result will be identical - a decrease in the overall liquidity ratio. So, in our last practical example, the company's liquidity suffered not because of short-term debt, but because of the growth of current assets, which in turn triggered an increase in short-term liabilities.

Clean cycle

If we compare the cost and credit cycles, by subtracting the second from the first, we get the so-called net cycle. This indicator can be characterized as an indicator of the level of production financing.

The net cycle shows the amount of financing that was carried out not directly by the participants in the production process, but from external sources (external, if we look from the point of view of production) - credit resources and increased equity capital.

A rise in the net cycle almost always indicates a deterioration in the quality of money management. If the net cycle has reached negative values, the accumulated liabilities exceed the required volume of financial support for production and excess money can be directed to other needs of the enterprise, for example, with their help, you can finance non-current assets.

Fluctuations in net cycle indicators can be interpreted as an indicator of the impact of the quality of working capital management on the need for financial sources of the company's production units. The increased need for financing of production will be reflected in the growth of the net cycle and will inform about the deteriorating management conditions. The decrease in the net cycle indicators can be considered as evidence of positive dynamics in the management environment - requests for raising funds are decreasing and more and more funds are being released from circulation.

A direct change in the clean cycle should be distinguished from its current value, since the control conditions are exclusively affected by the change in the clean cycle. If its value remains stable and no changes are observed, the enterprise's need for resources remained at the same level.

A practical example. The relationship between funding requests and working capital management.

Judging by the data from the table, the enterprise in the first two years did not observe a direct impact of management conditions on the need to attract additional funding. A similar conclusion can be drawn from the stable net cycle indicator over these months. However, in the last period, there has been an increase in funding resources, which appeared due to positive changes in the quality of asset management. This circumstance is indicated by the decrease in the level of the net cycle from 63 to 47 days.

The data from the last three examples can be interpreted as follows: although the conditions for working capital management have changed, the company's financial position is not directly dependent on these changes. If we talk about the profitability of total capital, then there are negative trends, but the absolute value of liquidity has changed in a positive direction.

As mentioned earlier, the next reporting period will be challenging due to the fact that the source of funding arising from the dividend arrears will be cut off. Since the improvement in the conditions for managing working capital was caused by this particular debt, the financial position of the enterprise will deteriorate.

If you look at the data in the last table, an almost threefold increase in the turnover period for current liabilities caused a 30% drop in the net cycle. If dividend arrears did not arise and the net cycle remained stable, the company would be forced to raise short-term loans to finance production. Debt coverage in the next reporting period will cause an increase in the net cycle, and there will be a need for new financial sources.

It is important to find out if dividend payments will be critical to financial condition enterprises. To do this, you should conduct an analysis of the financial condition of the company with the study of the total liquidity ratios.

The question often arises: why are short-term loans not included in the credit cycle, although they are related to current liabilities? The answer is quite simple: when calculating the absolute indicator of the net cycle and analyzing the level of turnover, the problem of identifying the company's need for external financing is solved, that is, with the use of credit funds. In other words, in this situation, credits are not an argument, but a sought value, so their inclusion in the calculation does not make sense.

Initial balance sheet analysis

The share of finished goods and goods has increased, therefore, there is a good demand for the company's products.

Accumulated capital occupies a significant share in the balance sheet structure table (45% of all own funds, which occupy 100%), that is, most of the profit is directed to reserves or other needs of the enterprise development.

The share of expenses for work in progress has decreased.

There was an increase in accounts receivable, which shows a negative trend, possibly due to the deterioration of the legal status of contracts with clients or due to ineffective policy towards debtors.

Cash increased by 2 788 612 (from 32.03% to 48.53%), which means that now the company has more money at its disposal. The company has sufficient funds for further development.

In the liabilities of the aggregate balance sheet, the share of own funds increased. The growing importance of own funds increases the financial stability of the enterprise, increases its ability to self-finance.

Fixed assets decreased by 4.63%. Own funds at the end of the reporting period amounted to 46 668 078, and borrowed funds 7 629 638, therefore the company has enough own funds for further development.

1) Analysis of turnover

TO about = (Revenue from sales for a given period) / (Average value of an asset)

Average asset = (Asset at the beginning of the period + Asset at the end of the period) / 2

T about = (Duration of the analyzed interval) / K about

For shared assets

Average asset = (48060672 + 54297716) / 2 = 51177844

TO about = 26909083/51177844=0,53

T about = 360 / 0.53 = 679 days, hence one full turnover of goods-money-goods occurs in 679 days.

For current assets

Average asset = (6881759 + 10287905) / 2 = 8584832

TO about = 26909083/8584832=3,13

T about = 360 / 3.13 = 115 days, hence one full turnover of goods-money-goods occurs in 115 days.

For permanent assets

Average asset = (41178913 + 44009811) / 2 = 42594362

TO about = 26909083/42594362=0,63

T about = 360 / 0.63 = 571 days, hence one full turnover of commodity-money-commodity occurs in 571 days.

Conclusion: the ability of an enterprise to generate income through commodity-money-commodity turnover is poor, turnover occurs in 679 days due to large fixed assets.

2) Clean cycle analysis

Let's calculate the periods of turnover for each of the elements of the credit and cost cycles using the formula:

Cost cycle

1) Advances to suppliers

T vol. = 0 / 42459.7 = 0 days

2) Material stocks (production stocks and MBE)

ZM Wed = (413783 + 423854) / 2 = 418818.5

Base for 1 day: = (14145882-2829176.4) / 360 = 31435.3

T vol. = 418818.5 / 31435.3 = 13 days

3) Unfinished production

NP Wed = (27316 + 12295) = 19805.5

Base for 1 day: = 14145882/360 = 39294.1

T vol. = 19805.5 / 39294.1 = 1 day

4) Finished products

GP Wed = (51080 + 95720) = 73400

Base for 1 day: = 39294.1

T vol. = 73400 / 39294.1 = 1 day

5) Receivables

DZ Wed = (3458268 + 4151773) / 2 = 3805020

T vol. = 3805020 / 74747.4 = 50 days

Зц = 0 + 13 + 1 + 1 + 50 = 64 days

Credit cycle

1) Accounts payable

KZ Wed = (796622 + 967607) / 2 = 882114.5 thousand rubles

Base for 1 day: = (14145882 + 849288 + 290316) / 360 = 42459.7

T vol. = 882114.5 / 42459.7 = 20 days

2) Buyers advances

APok. Wed = 0 rubles

Base for 1 day: = 26909083/360 = 74747.4

T vol. = 0 / 74747.4 = 0 days

3) Stable liabilities

UP Wed = (155591 + 148654 + 2262519 + 2195294) / 2 = 2381029

Base for 1 day: (14145882 + 849288 + 290316) / 360 = 42459.7

T vol. = 2381029 / 42459.7 = 56 days

CV = 20 + 0 + 56 = 76 days

Zc is about 2 months, so money turns around quickly.

The net cycle shows the part of the cost cycle that is not funded by the participants in the production process.

Clean Cycle = 64 - 76 = - 12 days

A negative value of the NP means that the credits of suppliers and buyers cover the financing needs of the production process with a margin and the company can use the resulting “stock” for other purposes.

3) Analysis of liquidity

1) Balance sheet liquidity.

The balance sheet of an enterprise is considered absolutely liquid if the following ratios are met:

At the beginning of the period A1> P1, A2> P2, A3

At the end of the period A1> P1, A2> P2, A3

2) The liquidity of the enterprise.

a) Ratio of total liquidity (indicator rate> = 2)

= (Current Assets) / (Current Liabilities)

at the beginning of the year:

at the end of the year:

b) Ratio of absolute (instant) liquidity (> = 0.3)

for the beginning of the year:

at the end of the year:

The absolute liquidity ratio characterizes instant liquidity; the ability of the enterprise to pay off the enterprise almost instantly.

c) Ratio of urgent (intermediate) liquidity (> = 1) - characterizes the ability to pay off obligations at the expense of the most liquid part of assets.

for the beginning of the year:

at the end of the year:

Calculation of the acceptable value of the total liquidity under the “soft” option (assumes regular payment of invoices to customers and regular payment of invoices to suppliers).

1) The period of turnover of assets for DZ - 50 days

2) The period of turnover of assets for KZ - 20 days

3) The period of turnover of assets for advances to suppliers - 0 days

4) The period of turnover of assets on advances from buyers - 0 days

5) Average value DZ = 3805020

6) Average SC = 882114.5

7) Average value of advances to suppliers = 0

8) Average value of advances from buyers = 0

9) Average cost of the least liquid part of assets =

10) Receipts from buyers available at maturity of accounts payable and advance payment to suppliers =

11) Own funds required to cover current payments to suppliers

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