The duration of one turnover of working capital is an example. The values ​​are affected. What is the working capital turnover ratio

Explanation of the essence of the working capital turnover indicator

Turnover working capital(English equivalent - Current Asset Turnover) is an indicator of business activity that measures the efficiency of using the company's current assets (cash, inventories of goods, inventories, accounts receivable). The ratio demonstrates the ratio of revenue to the average amount of current assets for the period. The value of the indicator indicates the number of revolutions made by current assets. In fact, an increase in the value of the indicator indicates that the company needs fewer resources in order to maintain the current level of activity. This leads to the release of part of the financial resources, which can be used to intensify current activities. A decrease in turnover leads to an increase in the need for financial resources. In the absence of access to cheap financial resources, this will lead to an increase in the company's financial costs.

Standard value of working capital turnover:

The value of the indicator fluctuates depending on the field of activity of the company, so how is it normative meaning absent. A higher value compared to competitors indicates intensive use of current assets. The increase in the indicator during the study period is good sign, as it indicates the company’s constant work to improve its inventory management policy, accounts receivable, cash and other current assets.

Directions for solving the problem of finding an indicator outside the standard limits

If the indicator value is low, then the reserves for increasing it can be as follows:

Reducing the amount of inventory to the minimum acceptable level, which will ensure uninterrupted operational processes;

Sales promotion and inventory reduction finished products and goods;

Implementation of measures to accelerate the repayment of accounts receivable;

Formula for calculating working capital turnover:

Asset turnover (for the year) = Revenue (Net income) / Average annual volume of current assets (1)

As with other annual averages, it must be remembered that there are several ways to calculate the average annual amount of current assets. If you have access to internal company information, then you should find the average based on the value of the indicator at the end of each working day. If there is monthly reporting, then the value of the indicator at the end of each month is used. If there is only annual reporting, then the value at the beginning of the study period and at the end of the study period is used.

Formula for calculating the average annual amount of current assets:

Average annual volume of current assets (most The right way) = Sum of volumes of current assets at the end of each working day / Number of working days (2)

Average annual volume of current assets (if only monthly data is available) = Sum of volumes of current assets at the end of each month / 12 (3)

Average annual assets (if only annual data are available) = (Assets at the beginning of the year + assets at the end of the year) / 2 (4)

An example of calculating working capital turnover:

Company OJSC "Web-Innovation-plus"

Unit of measurement: thousand rubles.

Current assets turnover (2016) = 900/(134/2+122/2) = 7.03

Current assets turnover (2015) = 885/(122/2+110/2) = 7.63

The data obtained show that the efficiency of use of current assets by the Web-Innovation-plus company is decreasing. If in 2015, for every ruble of current assets, goods and services worth 7.63 rubles were sold, then in 2016 - only 7.03 rubles. The main factor in the decline in the indicator is the constant increase in the amount of receivables for goods and services. Given that sales volume remains relatively stable during the study period, an increase in the amount of receivables for goods and services is a negative phenomenon. To increase the turnover of current assets, it is necessary to take measures to return the company's funds. To eliminate the risk of a problem occurring in the future, it is necessary to develop a comprehensive strategy for commercial lending to clients. As part of the strategy, it is necessary to divide all buyers into groups, depending on the history of cooperation, their financial condition and their importance to the company. The main share of commodity (commercial) loans should fall on the most reliable and important clients.

The director of a company, who only has indicators of profit and overall profitability before his eyes, cannot always understand how to adjust them in the right direction. In order to have all the control levers in your hands, it is absolutely necessary to also calculate the turnover of working capital.
The picture of the use of working capital consists of four main indicators:

• Duration of turnover (determined in days);
• How many times do working capital turn over in the reporting period;
• How much working capital is there per unit of products sold;

Let's consider the calculation of these data using the example of an ordinary enterprise, as well as the calculation of a number of important coefficients for understanding the meaning of turnover indicators in big picture company success.

Turnover ratio

The main formula determining the rate of turnover of working capital is as follows:

Cob is the turnover ratio. It shows how many turnovers of working capital were made during a specific period of time. Other designations in this formula: Vp - volume of product sales for the reporting period;
Osr is the average balance of working capital for the reporting period.
Most often, the indicator is calculated for the year, but absolutely any period needed for analysis can be selected. This coefficient is the rate of turnover of working capital. For example, the annual turnover of a mini store mobile phones amounted to 4,800,000 rubles. The average balance in circulation was RUB 357,600. We get the turnover ratio:
4800000 / 357600 = 13.4 revolutions.

Duration of turnover

It also matters how many days one revolution lasts. This is one of the most important indicators, which shows how many days later the company will see the funds invested in turnover in the form of cash proceeds and will be able to use them. Based on this, you can plan both making payments and expanding your turnover. The duration is calculated as follows:

T is the number of days in the analyzed period.
Let's calculate this indicator for the above digital example. Since the enterprise is a trading enterprise, it has minimal amount weekends - 5 days a year, for calculation we use the figure of 360 working days.
Let's calculate how many days later the company could see the money invested in turnover in the form of revenue:
357,600 x 360 / 4,800,000 = 27 days.
As we can see, the turnover of funds is short; the management of the enterprise can plan payments and use of funds to expand trade almost monthly.
To calculate the turnover of working capital, the profitability indicator is also important. To calculate it, you need to calculate the ratio of profit to the average annual balance of working capital.
The enterprise's profit for the analyzed year amounted to 1,640,000 rubles, the average annual balance was 34,080,000 rubles. Accordingly, the profitability of working capital in in this example is only 5%.

Load factor of funds in circulation.

And one more indicator necessary to assess the speed of turnover of working capital is the load factor of funds in circulation. The coefficient shows how much working capital is advanced per 1 ruble. revenue. This is the working capital intensity, which shows how much working capital must be spent for the company to receive 1 ruble of revenue. It is calculated like this:

Where Kz is the load factor of funds in circulation, kopecks;
100 - conversion of rubles to kopecks.
This is the opposite of the turnover ratio. The smaller it is, the better the use of working capital. In our case, this coefficient is equal to:
(357,600 / 4,800,000) x 100 = 7.45 kopecks.
This indicator is an important confirmation that working capital is used very rationally. The calculation of all these indicators is mandatory for an enterprise that seeks to influence operational efficiency using all possible economic levers.
In Forecast NOW! can be calculated

• Turnover in monetary and natural units, both for a specific product and for a group of products, and by section - for example, by suppliers
• Dynamics of changes in turnover in any necessary sections

An example of calculating the turnover rate by product groups:

Assessing the dynamics of changes in turnover by product/group of products is also very important. In this case, it is important to correlate the turnover schedule with the service level schedule (how much we satisfied consumer demand in the previous period).
For example, if turnover and the level of service are declining, then this is an unhealthy situation - you need to study this group of products more carefully.
If turnover increases, but the level of service decreases, then the increase in turnover is most likely due to smaller purchases and an increase in shortages. The opposite situation is also possible - turnover decreases, but in this calculation the level of service - customer demand is ensured by large purchases of goods.
In these two situations, it is necessary to evaluate the dynamics of profit and profitability - if these indicators grow, then the changes taking place are beneficial for the company; if they fall, it is necessary to take action.
In Forecast NOW! It’s easy to assess the dynamics of turnover, level of service, profit and profitability - just carry out the necessary analysis.
Example:

Since August, there has been an increase in turnover with a decrease in the level of service - it is necessary to evaluate the dynamics of profitability and profit:

Profitability and profit have been falling since August, we can conclude that the dynamics of changes are negative

The efficiency of using working capital is characterized by a system of economic indicators, and, above all, the turnover of working capital and the duration of one turnover. The turnover of working capital refers to the duration of the complete circulation of funds from the moment of acquisition of working capital (purchase of raw materials, supplies, etc.) to the release and sale of finished products. The circulation of working capital is completed by crediting the proceeds to the company's account.

The turnover of working capital at an enterprise depends on the following factors:

duration of the production cycle;

quality of products and their competitiveness;

efficiency of working capital management at the enterprise in order to minimize them;

solving the problem of reducing material consumption of products;

method of supplying and marketing products;

working capital structures, etc.

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

1. Working capital turnover ratio. Shows the number of revolutions that working capital makes during the analyzed period. The higher the turnover ratio, the better the working capital is used.

Cob=N/Esro(1)

Where Cob- working capital turnover ratio;

N- revenues from sales;

EURO- average annual cost of working capital.

Euro = (Start of year + End of year)/2 (2)

Where EURO- average annual cost of working capital;

Start of the year- cost of working capital at the beginning of the year;

End of the year- cost of working capital at the end of the year.

2. Load factor of funds in circulation. It is the inverse of the direct working capital turnover ratio. It characterizes the amount of working capital spent per 1 ruble. sold products. The lower the load factor, the more efficiently the working capital is used at the enterprise, and its financial position improves.

Kz = Euro/N x100 (3)

Where Kz- load factor of funds in circulation

N- revenues from sales;

EURO- average annual cost of working capital;

100 - conversion of rubles to kopecks.

3. Coefficient of duration of one turnover of working capital. It shows how long it takes for the company to return its working capital in the form of revenue from sales of products. A decrease in the duration of one revolution indicates an improvement in the use of working capital.

TE = T/Kob (4)

Where THOSE- duration of the 1st turnover of working capital;

T

Cob- turnover ratio;

Comparison of turnover ratios over the years allows us to identify trends in the efficiency of using working capital. If the working capital turnover ratio has increased or remained stable, then the enterprise operates rhythmically and uses financial resources rationally. A decrease in the turnover ratio indicates a decline in the rate of development of the enterprise and its poor financial condition. The turnover of working capital may slow down or accelerate. As a result of accelerating turnover, that is, reducing the time it takes working capital to pass through individual stages and the entire circuit, the need for these funds is reduced. They are being released from circulation. The slowdown in turnover is accompanied by the involvement of additional funds in the turnover. Relative savings (relative overexpenditure) of working capital is determined by the following formula:

E = Euro-Esrp x(Nreport/N prev) (5)

Where E– relative savings (overexpenditure) of working capital;

E sro- average annual cost of working capital for the reporting period;

E srp- average annual cost of working capital of the previous

Nreport- revenue from sales of the reporting year;

Nbefore- revenue from sales of the previous year.

Relative savings (relative overexpenditure) of working capital:

E = 814 - 970.5x375023/285366 = - 461.41 (thousand rubles) - savings;

The general assessment of working capital turnover is presented in Table 5

Table 5

General assessment of working capital turnover

Conclusion: The general assessment of working capital shows that for the analyzed period:

The duration of the turnover of working capital has improved by 0.44 days compared to the previous period, that is, funds invested in current assets go through a full cycle and again take cash form 0.44 days earlier than in the previous period;

A decrease in the utilization rate of funds in circulation by 0.13 indicates that working capital has become more efficiently used at the enterprise compared to last year, i.e. financial situation improves;

An increase in the turnover ratio by 166.66 indicates better use of working capital;

The acceleration of turnover of working capital led to their release from circulation in the amount of 461.41 thousand rubles.

Accounts receivable is the amount of debts owed to an enterprise or organization from legal entities and individuals. The most general recommendations for managing accounts receivable are:

Monitor the status of settlements with customers for deferred (overdue) debts;

If possible, target a larger number of buyers in order to reduce the risk of non-payment by one or more large buyers;

Monitor the status of accounts receivable and accounts payable - a significant excess of accounts receivable poses a threat to the financial stability of the enterprise and makes it necessary to attract additional sources of financing.

The information base for the analysis of receivables is the official financial statements: accounting report - form No. 1 (section "Current assets"), form No. 5 "Appendix to the balance sheet" (section "Receivables and payables" and references thereto).

For accounts receivable, as well as for working capital, in general, the concept of “turnover” is used. Turnover is characterized by a group of coefficients. To assess accounts receivable turnover, the following indicators are used:

1. Accounts receivable turnover ratio.

Shows how effectively the company organized the collection of payment for its products. A decrease in this indicator may signal an increase in the number of insolvent customers and other sales problems.

Cobd =N/Esrd (6)

Where N- revenues from sales;

Cobd

Esrd- average annual value of accounts receivable.

2. Period of repayment of receivables.

This is the length of time required for the enterprise to collect debts for sold products. It is defined as the reciprocal of the accounts receivable turnover ratio and multiplied by the period.

TEDz = T/Kob (7)

Where TEDz- duration of the 1st turnover of working capital;

T- duration of the 1st period (360 days);

Cobd- Accounts receivable turnover ratio.

3. Share of receivables in the total volume of current assets. Shows what share receivables occupy in the total amount of current assets. An increase in this indicator indicates an outflow of funds from circulation.

Ddz = Edzkon/TAkon x 100% (8)

Where Jedzkon- accounts receivable at the end of the year;

TAcon- current assets at the end of the year.

Ddz- share of accounts receivable

All calculated data are grouped and listed in table 6.

Table 6

Accounts receivable turnover analysis

Conclusion: analysis of accounts receivable turnover shows that the state of settlements with customers has improved compared to last year:

The average repayment period for receivables decreased by 1.87 days;

An increase in the accounts receivable turnover ratio by 73.49 turns shows a relative decrease in commercial lending;

The share of accounts receivable in the total volume of working capital decreased by 8.78%, which indicates an increase in the liquidity of current assets, and therefore, a slight improvement in the financial condition of the enterprise.

Inventory management (IPM).

The accumulation of mineral resources has positive and negative sides.

Positive sides:

The fall in the purchasing power of money forces the enterprise to invest temporarily free funds in stocks of materials, which can then be easily sold if necessary;

The accumulation of inventories is often a necessary measure to reduce the risk of non-delivery or under-delivery of raw materials and materials necessary for the production process of the enterprise.

Negative sides:

The accumulation of inventories inevitably leads to an additional outflow of cash due to an increase in costs associated with storing inventories (rental of warehouse premises and their maintenance, costs of moving inventories, insurance, etc.), as well as an increase in costs associated with losses due to obsolescence, damage , theft and uncontrolled use of inventories, due to an increase in the amount of tax paid, and due to the diversion of funds from circulation.

To assess inventory turnover, the following indicators are used:

1. Inventory turnover ratio. Shows the turnover rate of inventories.

Kmpz =S/Esrmpz (9)

Where Esrmpz- average annual cost of inventories; S- cost;

Kmpz- inventory turnover ratio.

The cost price is taken from Form No. 2 - Profit and Loss Statement. The higher this indicator, the less funds are associated with this least liquid item, the more liquid the structure of current assets and the more stable the financial position of the enterprise. It is especially important to increase turnover and reduce inventories if the company has a large debt. In this case, creditor pressure may be felt before anything can be done with the inventory, especially in unfavorable conditions.

2. Shelf life of MPZ.

An increase in this indicator indicates the accumulation of inventories, and a decrease indicates a reduction in inventories. The turnover rates of finished products and inventories, as well as the shelf life of inventories and finished products, are calculated similarly.

Tmpz = T / Kmpz (10)

Where Tmpz- shelf life of MPZ;

T- duration of the 1st period (360 days);

Kmpz- inventory turnover ratio.

An increase in this indicator indicates the accumulation of inventories, and a decrease indicates a reduction in inventories. The turnover rates of finished products and inventories, as well as the shelf life of inventories and finished products, are calculated similarly. Data from the analysis of inventory turnover are presented in table. 7.

Table 7

Analysis of inventory turnover

Conclusion: analysis of inventory turnover shows that during the analyzed period:

The turnover rate of inventories increased by 0.5 revolutions, and the shelf life of inventories decreased by 0.8 days compared to last year. Consequently, the enterprise does not accumulate inventories;

The turnover rate of industrial inventories decreased by 20.8 revolutions, and the shelf life of industrial inventories increased by 1.43 days compared to last year. Consequently, the enterprise is accumulating inventories;

The turnover rate of finished products increased by 2.19 turns, and the shelf life of finished products decreased by 2.15 days. Thus, finished products do not accumulate at the enterprise.

In the article we will consider working capital turnover as one of the most important indicators for assessing the financial condition of an enterprise.

Working capital turnover

Working capital turnover (English Turnover Working Capital) is an indicator related to the company and characterizing the intensity of use of working capital (assets) of the enterprise/business. In other words, it reflects the rate of conversion of working capital into cash during the reporting period (in practice: year, quarter).

Formula for calculating working capital turnover

Working capital turnover ratio (analogue: fixed asset turnover ratio, K ook) – represents the ratio of sales revenue to the average working capital.

The economic meaning of this coefficient is an assessment of the effectiveness of investing in working capital, that is, how working capital affects the amount of sales revenue. The formula for calculating the working capital turnover indicator on the balance sheet is as follows:

In practice, the analysis of turnover is supplemented with the coefficient of fixation of working capital.

Working capital consolidation ratio– shows the amount of profit per unit of working capital. The calculation formula is inversely proportional to the working capital turnover ratio and has the following form:

– shows the duration (duration) of the turnover of working capital, expressed in the number of days necessary for the payback of working capital. The formula for calculating the working capital turnover period is as follows:

Analysis of working capital turnover

The higher the value of the working capital turnover ratio, the higher the quality of working capital management at the enterprise. In financial practice, there is no single generally accepted value for this indicator; the analysis must be carried out in dynamics and in comparison with similar enterprises in the industry. The table below shows different kinds turnover analysis.

Video lesson: “Calculation of key turnover ratios for OJSC Gazprom”

Summary

Working capital turnover is the most important indicator of the business activity of an enterprise and its dynamics directly reflects financial stability enterprises in the long term.

It is necessary to calculate the coefficient to estimate the rate of conversion of working capital into money. It is closely related to the efficiency of sales management at the enterprise: an increase in the indicator in dynamics characterizes an increase in sales and profits. To calculate the indicator, you will need data on revenue and the average annual cost of fixed assets.

How efficiently are working capital used? Is there a shortage of assets? Are there problems with the money in circulation?

What are working capital?

These are revolving funds that are involved in the process of production and marketing of products. They provide the process of exchanging money for raw materials, raw materials for products, products for money.

Working capital is the cost of all items of labor involved in the production process. They change their form (from natural to monetary) and are included in the cost of production.

The cost of this indicator includes:

• Costs of materials, raw materials.
• Costs of creating, storing and selling products.
• Money received from sales.

Every enterprise has working capital; they are needed to organize the smooth operation of the company. Their lack can lead to production downtime due to the inability to purchase raw materials, pay wages personnel, payment of taxes, utility bills. The shortage has a negative impact on current processes and further development enterprises, a cash gap may form (lack of money to finance upcoming expenses).

If there is an insufficient amount of its own working capital, the enterprise attracts borrowed money (credits, loans, loans, deferred payments to the budget).

More information on the topic can be obtained from the video:

Assessing the efficiency of using working capital

To assess the effectiveness of working capital management, there is a working capital turnover ratio (CRT). It determines the number of revolutions during which raw materials manage to turn into money. Calculated for any period - month, quarter, year.

K OOS indicates how many times funds are turned over over a certain period, at what speed.

Formula for calculation:

• B - revenue;
• ΔOC is the average amount of working capital.

ΔOA is calculated using the formula:

• OS NP - current assets at the beginning of the period;
• OS KP - current assets at the end of the period.

To calculate the environmental protection factor, you can use the data balance sheet. The formula in this case will be like this:

• Page 2010 is the value of string 2010 from Form 2.
• Page 1200 NG - the value of line 1200 at the beginning of the year (form 1).
• Page 1200 KG - the value of line 1200 at the end of the year (form 1).

Calculation of K OOS using an example

For the convenience of calculating the working capital turnover ratio, you can use Excel spreadsheet(download example).

Conclusions from the table. In 2014, revenue indicators and the volume of fixed assets fell, but despite this, the environmental impact ratio increased by 1.06. This means that the number of turnovers has increased over the year. Further, since 2014, there has been growth in all indicators. Consequently, the enterprise operates more and more efficiently every year.

Normal value of the indicator

The working capital turnover ratio always takes a positive value, but it can be anything - it all depends on the industry and the specific enterprise. The Environmental Protection Code does not have any standard by which one can evaluate whether 1 or 100 is too much or too little. Each company will have different results. And to understand the current economic situation, they need to be compared with values ​​from previous years and the industry average. Direct competitors will be of particular interest. If there is growth (as in the example above), this is a positive sign. A decrease is a reason to think about organizing the production/sales process. Therefore, we must strive to increase the coefficient.

Important! Changes in environmental protection can be influenced not only by internal ones, but also external factors(changes in tax legislation, state sanctions policy, decline in the entire industry, reduction in state support, etc.).

You can increase the value of the indicator in several ways:

• Reduce the amount of debt of the enterprise.
• Reduce the turnaround time for raw materials/goods.
• Stimulate demand.
• Reduce production costs.
• Strengthen the company's image among clients.
• Update the material and technical base, introduce new technologies.
• Improve the quality of services provided and goods sold.
• Reduce inventory.
• Initiate personnel changes.

It is also important to analyze the indicator with other economic indicators (liquidity ratio, asset turnover, etc.). Data must be taken for similar periods of time.

Monitoring environmental protection helps to notice in a timely manner a situation that threatens the company’s work and to correct it in a timely manner. management decisions, because the faster the funds turn around, the sooner the company’s costs will be recouped. The slowdown in turnover leads to an increase in the need for working capital.