Decrease in equity capital turnover ratio. Analysis of enterprise capital turnover indicators

8. Analysis of enterprise capital turnover indicators

The term business activity in in a broad sense means the whole range of efforts aimed at promoting the company in the markets of products, labor and capital, i.e. business activity indicators characterize the results and efficiency of the current main production and commercial activities.

To assess business activity the following are used:

1) quality criteria;

2) quantitative indicators.

Qualitative - that is, strictly non-formalizable:

Width of sales markets;

Availability of products for export;

The reputation of the enterprise, expressed in the popularity of customers.

Quantification business activity can be carried out in the following categories:

Assessment of the degree of implementation of the plan based on key indicators and analysis of deviations;

Assessment of the level of efficiency in the use of material, labor and financial resources of the enterprise.

Turnover indicators are very important for assessing the financial condition of an enterprise. These indicators include:

1. Capital turnover ratio - shows the number of turnovers made by working capital over a certain period of time, and characterizes the volume of products sold per 1 ruble invested in working capital;

2. The duration of one turnover is the average period during which the funds invested in production and commercial operations are returned to the economic activities of the organization.

The higher the turnover rate, the more profit the company will receive when investing the same funds. Accelerating capital turnover helps reduce the need for working capital(absolute release), an increase in production volumes (relative release) and, therefore, an increase in profits. As a result, the financial condition of the organization improves and solvency strengthens. But accelerating turnover makes sense when the enterprise’s activities are profitable, that is, the financial result is profit.

The slowdown in turnover requires raising additional funds to continue economic activity organization at least at the level of the previous period.

It is also possible to determine private turnover indicators; in this case, instead of the total amount of current assets, individual constituent elements are used.

For an enterprise, it is desirable that the change in the turnover ratio in dynamics has a positive value; when the duration of one turnover changes in dynamics, it has a positive value. negative value.

If the number of revolutions has decreased, that is, there has been an acceleration in turnover, then the relative savings can be calculated (overspending - when the turnover slows down). Table 8 shows the calculation of debt turnover indicators and equity, total capital and current assets.

Table 8

Analysis of enterprise capital turnover indicators

In general, for JSC “ZhBK No. 1” it can be said that turnover ratios are increasing over time, which indicates a greater increase in the values ​​of total capital and its components, as well as assets compared to revenue from sales of products.

The turnover ratio of total capital increased by 0.58 and at the end of the reporting period amounted to 1.46. Consequently, the duration of one turnover of total capital decreased by 162 and at the end of 2004 amounted to 247 days. Accelerating capital turnover helps to reduce the need for working capital (absolute release), increase production volumes (relative release) and, therefore, increase profits. As a result, the financial condition of the organization improves and solvency strengthens.

The equity turnover ratio increased by 0.8 and by the end of the reporting year amounted to 1.85. Consequently, the duration of one turnover of equity capital in 2004 decreased by 148 days and became 195 days (while at the beginning of the year it was 343 days.

The debt capital turnover ratio also increased by 1.45, and the duration of one turnover decreased by 14 days and amounted to 52 days at the end of the reporting period.

The turnover of current assets increased by 0.67, the duration of one turnover of current assets decreased by 82 days and became 173 days, including the duration of one turnover of inventories decreased by 27 days and became 28 days at the end of the year, the duration of the turnover of receivables decreased by 63 days and became 117 days, the duration of the turnover of short-term financial investments increased by 2 days and became 11 instead of 9 days, the duration of one cash turnover also increased and became 10 days.

And therefore, with a decrease in the duration of one turnover of current assets by 82 days and with the acceleration of turnover, savings occurred at the enterprise during the reporting period working capital, which amounted to 143,828 thousand rubles.

Her enhancement, pay attention to a large share borrowed funds in the formation of assets, to find ways to increase the role of equity capital in the commercial activities of the organization. 2.3 Managing the attraction of borrowed capital at the enterprise OJSC Pavlovskgranit It depends on how much capital the organization has, how optimal its structure is and how expediently it is being transformed...

Profitability is falling, which is an argument in favor of a balanced workforce. Conclusions As a result of the study

To characterize the use of capital, it is advisable to calculate a number of coefficients:

Turnover of immobilization assets;

Turnover of all current assets;

Accounts receivable turnover;

Accounts payable turnover;

Equity turnover;

Operating ratio.

Total capital (assets) turnover ratio generally characterizes the level of economic activity of an enterprise, that is, the efficiency of the enterprise’s use of all available resources, regardless of the sources of their attraction. This coefficient shows how many times during the reporting period the full cycle of production and circulation is completed, or how many monetary units each unit of assets brought from the sale of products.

The total capital turnover ratio (Ok) is calculated using the formula:

where B is revenue from sales of products

C a - the average annual value of all assets (the amount at the beginning and end of the year, divided by 2).

Typically, the value of the total capital turnover ratio of a particular enterprise is compared with the industry average. If this ratio is lower for the enterprise, then it is necessary to increase sales volume or, if this is not possible, to reduce certain types of assets. If this coefficient is considered in dynamics, then its growth can mean either an acceleration of the circulation of enterprise funds, or an inflationary increase in prices for sold products.

Immobilized assets ratio (Oi.a. ) shows how efficiently enterprises use their fixed assets and other non-current assets. This indicator is calculated using the formula:

where C i.a. - average annual non-current assets (the amount at the beginning and end of the year, divided by 2).

The duration of one revolution is (in days):

Ratio of all current assets (Оо.а) is one of the most important indicators of the efficiency of an enterprise, since it characterizes the number of turnovers of all working capital. It is generally believed that the shorter the duration of one revolution, the more efficiently working capital is used.

This coefficient is calculated by the formula:

where C o.a. - average annual value of current assets (the amount at the beginning and end of the year, divided by 2).

The duration of one revolution is equal (in days):

(20.13)

It should be noted that for each enterprise at a certain point in time there is its own optimal structure of working capital. Therefore, the main criterion is to ensure rapid turnover of current assets.

Accounts receivable turnover ratio (Od.z.) characterizes the effectiveness of collection of receivables and the enterprise’s credit policy in relation to its customers. An increase in this indicator indicates an expansion of credit to product consumers. It is generally believed that if receivables turn over faster material resources, then this means a high intensity of incoming cash loans to the enterprise’s account. In this case, the debt-to-equity ratio may be greater than 1.0.

The accounts receivable turnover ratio is calculated using the formula:

where C d.z. - average annual accounts receivable (amount at the beginning and end of the year, divided by 2).

The duration of the receivables turnover is equal (in days):

(20.15)

Accounts payable turnover ratio ( O k.z.) characterizes the terms of settlements of the enterprise with its partners. It is calculated by the formula:

where C short circuit - average annual accounts payable (the amount at the beginning and end of the year, divided by 2).

The duration of the accounts payable turnover is equal (in days):

(20.17)

It is advisable to compare the repayment period of accounts payable with the repayment period of receivables, that is, compare the conditions for receiving and granting deferred payments to your partners. If accounts payable are provided for a longer period. than the accounts receivable, then such conditions are acceptable for the enterprise.

Equity turnover ratio (O average) characterizes various aspects activity of the enterprise: from a commercial point of view, it reflects either an increase in product sales, or a lack of equity capital; from financial - the rate of turnover of invested capital; from the economic side - the activity of funds that the enterprise risks. The equity capital turnover ratio shows the efficiency of its use.

It is calculated by the formula:

where C r.s. - the average annual value of equity capital and reserves (the amount at the beginning and end of the year, divided by 2).

The duration of one turnover of equity capital is equal (in days):

(20.19)

Operating ratio (Kop.) is calculated as the ratio of costs of production and sales of products to revenue from sales of products:

where Z is the cost of production and sales of products.

An increase in the operating ratio may mean: an increase in prices for material resources, the inability to control production costs, or the need to increase the selling prices of agricultural products. As a rule, this coefficient ranges from 0.5 to 0.9. A coefficient value greater than 0.9 means extreme inefficiency of the enterprise, and less than 0.5 indicates that all production and sales costs may not have been taken into account.

When assessing the financial condition of an enterprise, profitability indicators, which characterize the profitability of products, all assets and equity capital, are especially important.

Shows the effectiveness of using your own working capital. The standard value is an increase.

Fixed asset turnover ratio (or capital productivity)

Shows the efficiency of using fixed assets. Normative value- increase.

Inventory turnover ratio

To characterize the efficiency of inventory management, the inventory turnover ratio and the turnover duration indicator are used.

The coefficient shows how many turnovers the inventory made during the year, i.e. how many times they transferred their value to finished products. Inventory turnover duration indicator can be calculated as follows:

This indicator characterizes the period of time during which inventories are converted into goods sold.

Accounts receivable turnover ratio

This ratio is used to judge how many times on average during the reporting period receivables are converted into cash, i.e., repaid. The accounts receivable turnover ratio is calculated by dividing revenue from product sales by the average annual cost of net accounts receivable for goods, works, services:

To analyze accounts receivable turnover, the indicator is also used duration of receivables turnover . This is often called the loan term.

This indicator gives the estimated number of days to repay the loan taken by debtors. The standard value is a decrease.

Accounts payable turnover ratio

This coefficient complements the previous one.

The ratio shows how many turnover the company needs to pay off its existing debt. For analysis accounts payable turnover , as well as for analyzing accounts receivable, use the indicator of the turnover period of accounts payable:

This indicator gives the estimated number of days to repay the loan received from the company's suppliers. The standard value is a decrease.

As follows from the calculations, the conditions under which the enterprise receives deliveries are much worse than the conditions provided by the enterprise to buyers of its products. This leads to the fact that the flow of cash from debtors is less intense than from creditors. Continuing this trend may lead to a shortage of funds in the company's accounts.

In addition, it is noteworthy that the company has problems with the sale of products. This is evidenced by the excess of the receivables turnover period over the inventory turnover period.

A positive value of the indicator of the duration of turnover of working capital indicates that the enterprise has insufficient funds.

The low value of the asset turnover ratio is explained by the “heavy” structure of assets.

1.4 Enterprise profitability analysis

Profitability indicators show how profitable (profitable) the activity of an enterprise is. Various options for profitability indicators are calculated.

Return on assets

(ROA):

f. 2, r. 220: f. 1, r. 280 (gr. 3 + gr. 4) : 2

Shows the profitability of all funds invested in the enterprise. Standard value -> 0 increase.

ROA=

Return on equity

(ROE):

f. 2, r. 220: f. 1, r. 380 (gr. 3 + gr. 4) : 2

Characterizes the return on equity capital. Standard value -> 0 increase.

ROE=

Sales profitability:

f. 2, r. 220: f. 2, r. 035

Characterizes the profitability of the enterprise's economic activities. Standard value -> 0 increase.

Rreal.=

Product profitability:

f. 2, r. 100: f. 2, r. 040 + 070 + 080

Characterizes the profitability of the main activity of the enterprise. Standard value -> 0 increase.

Rpr.=

As can be seen from the calculations, profitability indicators are at a fairly low level. In this regard, it should be noted that for an enterprise it is very important to choose the optimal position, the equilibrium point between financial autonomy and return on equity.

2. Normalization of the enterprise’s balance sheet based on the inventory performed

As a result of the inventory, the following was revealed:

By asset:

1) non-productive assets – -16%;

2) production inventories - -3%.

By passive:

1) retained earnings;

2) accounts payable.

3) reserve capital

non-productive assets = 1662.3*0.84=1396.33 (line 030 F1)

Industrial inventories = 1049.1 * 0.97 = 1017.63 (line 100 F1)

Total for section 1.= 1396.33 (line 080 F1)

Total for section 2.=11366.33 (line 260 F1)

Balance=12762.66 (line 280 F1)

13581.3-12762.66=818.64 (difference)

retained earnings:

2279.1-818.64=1460.46 (line 350 F1)

F2 (p. 220) PE = Stainless prib.k.g + Res.drop. k.g. – NP.beg.g. – RK.beginning of the year =

1460,46+ 0 – 1117,4– 0= 343,06

Turnover or business activity ratios of an enterprise– show the effectiveness of the enterprise (organization) using its capital and funds. These ratios show the rate of capital turnover and its conversion into cash. Turnover ratios directly determine the degree of solvency of an enterprise (ability to pay its obligations), financial stability And financial risk. Turnover ratios in their calculations do not use net profit as profitability ratios, but revenue from the sale of goods and services. This allows us to evaluate not the profitability of the enterprise, but its intensity and speed of turnover of resources, assets, inventories, cash, receivables and payables.

This article will discuss the main enterprise turnover ratios most often used in financial practice, such as:

1. Asset turnover ratio
2. Equity turnover ratio
3. Current assets turnover ratio
4. Inventory turnover and asset cost ratio
5. Accounts receivable turnover ratio
6. Accounts payable turnover ratio
7. Cash turnover ratio

The asset turnover ratio is the ratio of revenue from products sold to all assets of the enterprise. This ratio shows the efficiency of use of assets and shows the number of turnovers of the entire capital for the period and the amount of cash that a unit of assets brought.

There are no standard values ​​for the asset turnover ratio, so it is necessary to directly study the dynamics of changes in this indicator over time for one enterprise or industry. In capital-intensive industries, asset turnover will be lower than in trade areas. The higher the asset turnover ratio, the greater the efficiency of asset utilization. This indicator differs from return on assets indicators in that it does not show the profitability of the enterprise, but characterizes the intensity of turnover. Therefore, turnover formulas use not net profit, but the enterprise’s revenue for the reporting period. The formula for calculating the asset turnover ratio is as follows:

Asset turnover ratio= Sales revenue / Average assets for the period

Asset turnover ratio= line 10 Form No. 2 / (0.5 * (line 300 beginning of the year + line 300 end of the year))

The equity capital turnover ratio is calculated as the ratio of the volume of product sales (revenue) to the average annual cost of equity capital. The equity turnover ratio shows the activity and speed of the enterprise's use of its own capital.
There are no standard values ​​for the equity capital turnover ratio; it is necessary to study the dynamics of changes in this indicator for one enterprise. The formula for calculating the equity turnover ratio is as follows:

Equity turnover ratio= Revenue from product sales / average cost equity capital for the period

Equity turnover ratio= line 10 Form No. 2 / 0.5* (line 490 at the beginning of the year + line 490 at the end of the year)

The turnover ratio of current assets shows the activity of use and the speed of circulation of current assets. This ratio characterizes how much current assets made a full turnover in one year and how much revenue they brought. Current assets include accounts receivable, cash, inventories and deferred expenses, short-term financial investments. The higher the value of this coefficient, the more effective the enterprise. Formula for calculating the turnover ratio of current assets:

Current assets turnover ratio= Net revenue from product sales / Average annual cost of current assets

Current assets turnover ratio= line 10 Form No. 2 / 0.5 (line 290 at the beginning of the year + line 290 at the end of the year)

The ratio of inventory turnover and asset costs shows the intensity of inventory use and turnover rate.
There are no standard values ​​for the turnover ratio. This indicator must be analyzed over time for a specific enterprise or industry. A decrease in the turnover ratio indicates the accumulation of excess inventory in the company's warehouses. The higher the ratio of inventory turnover and asset costs, the higher the activity of the enterprise in creating cash. An excessively high inventory turnover and asset cost ratio indicates severe inventory shortages and rapid depletion. Formula for calculating the inventory turnover ratio and asset costs:

Inventory turnover and asset cost ratio= Net revenue from product sales / Average annual cost of inventories

Inventory turnover and asset cost ratio= line 10 Form No. 2 / 0.5*[(line 210+line 220) at the beginning of the year + (line 210+line 220) at the end of the year]

The accounts receivable turnover ratio shows the rate of turnover of accounts receivable. There are no clear standard values ​​for the accounts receivable turnover ratio; they vary depending on the industry, but the higher the ratio, the faster consumers repay their obligations, which is beneficial for the enterprise. The formula for calculating the accounts receivable turnover ratio is as follows:

Accounts receivable turnover ratio= Revenue from sales of goods and services / Average annual value of accounts receivable

Accounts receivable turnover ratio= line 10 Form No. 2 / 0.5*[(line 230+line 240) at the beginning of the year + (line 230+line 240) at the end of the year]

The accounts payable turnover ratio shows the speed and intensity of repayment of the enterprise's obligations to borrowers and characterizes the number of turnovers in the repayment of accounts payable for the reporting period, which is usually one year. The standard value of the accounts payable turnover ratio depends on the industry and the nature of the enterprise's activities. The formula for calculating the accounts payable turnover ratio is as follows:

Accounts payable turnover ratio= Revenue from sales of goods and services / Average amount of accounts payable

Accounts payable turnover ratio= line 10 Form No. 2 / 0.5 * (line 620 at the beginning of the year + line 620 at the end of the year)

The cash turnover ratio shows the intensity of use of the enterprise's funds and shows the number of turnover for the reporting period. The formula for calculating the cash turnover ratio is as follows:

Cash turnover ratio= Revenue from sales of goods and services / Average amount of funds

Cash turnover ratio= line 10 Form No. 2 / 0.5 * (line 260 at the beginning of the year + line 260 at the end of the year)

conclusions
Turnover ratios are an important indicator of the efficiency of use of resources by an enterprise. These indicators, unlike profitability indicators, show turnover rate and intensity, because their calculation formulas use revenue values ​​(rather than net profit as in profitability ratios). Turnover ratios are studied in dynamics to analyze the direction and assess the nature of their changes for one enterprise, a group of similar enterprises and one industry.

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

Today, the analysis of working capital turnover raises many disputes between practical economists and theoretical economists. This is the most vulnerable point in the entire technique. financial analysis activities of the organization.

What characterizes turnover analysis

The main purpose for which it is carried out is to assess whether the enterprise is able to make a profit by completing the “money-product-money” turnover. After necessary calculations the conditions for material supply, settlements with suppliers and customers, sales of manufactured products, etc. become clear.

So what is turnover?

This economic value, which characterizes a certain time period during which the complete circulation of funds and goods takes place, or the number of these circulations during a designated time period.

Thus, the turnover ratio, the formula of which is given below, is equal to three (the analyzed period is a year). This means that in a year of operation, an enterprise earns 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 revenue / average assets.

It is often necessary to find out the number of days it takes to complete one revolution. To do this, the number of days (365) is divided by the turnover ratio for the analyzed year.

Commonly used turnover ratios

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

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

Own capital of the enterprise,

Working capital assets,

Full assets

Inventories,

Debts to creditors,

Accounts receivable.

The higher the calculated total asset turnover ratio, the more intensively they work and the higher the indicator of business activity of the enterprise. Industry characteristics do not always have a positive effect on turnover. Thus, in trade organizations through which large volumes of money pass, turnover will be high, while in capital-intensive enterprises it will be significantly lower.

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

If the analysis shows a high receivables turnover ratio, then there is reason to talk about significant efficiency in payment collection.

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

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

Factors influencing the acceleration of working capital turnover

These include:

Reducing the total time spent on the technological cycle,

Improvement of technology 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 acquiring labor, materials, raw materials, etc. Its end is the receipt of money for goods sold or services provided. The value of this period shows how effective working capital management is.

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

Inventory turnover

This is the process of replacement and/or complete (partial) renewal of inventory. It occurs through the transfer of material assets (that is, capital invested in them) from the inventory group to the production and/or sales process. Analysis of inventory turnover makes it clear how many times the remaining inventory was used during the billing period.

Inexperienced managers create excess reserves for reinsurance, without thinking that this excess leads to the “freezing” of funds, excess expenses and a decrease in profits.

Economists advise avoiding such deposits of inventories that have low turnover. And instead, by accelerating the turnover of goods (services), freeing up resources.

Inventory turnover ratio is one of the important criteria for assessing the activities of an enterprise

If the calculation shows a ratio that is too high (compared to averages or the previous period), then this may indicate a significant lack of inventory. If on the contrary, then the stocks of goods are not in demand or are very large.

It is possible to obtain a characteristic of the mobility of funds invested in creating inventories only by calculating the inventory turnover ratio. And the higher the business activity of the organization, the faster the funds are returned in the form of proceeds from the sale of goods (services) to the accounts of the enterprise.

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

It affects inventory turnover and the activities of the organization's marketing department, since high profitability of sales entails a low turnover ratio.

Accounts receivable turnover

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

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

The accounts receivable 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 an enterprise is not always accompanied by high turnover. For example, sales of products on credit result in a high accounts receivable balance, while its turnover rate 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). Calculation of accounts payable turnover makes it clear how many times its average value was repaid during the analyzed period.

Financial stability and solvency are reduced with a high share of accounts payable. At the same time, it gives you the opportunity to use “free” money for the entire duration of its existence.

The calculation is simple

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

A positive factor in the activity of an enterprise is considered to be the excess of the accounts receivable ratio over the accounts payable turnover ratio. Lenders prefer more high coefficient turnover, however, it is beneficial for the company to keep this ratio at a lower level. After all, unpaid amounts of accounts payable are a free source for financing the current activities of the organization.

Resource efficiency, or asset turnover

Makes it possible to calculate the number of capital turnover for a particular period. This turnover ratio, the formula exists in two versions, characterizes the use of all assets of the organization, regardless of the sources of their receipt. An important fact is that only by determining the resource efficiency ratio can one see how many rubles of profit accrue for each ruble invested in assets.

The asset turnover ratio is equal to the quotient of revenue divided by the value of assets on average for the year. If you need to calculate 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 speed of turnover. The latter is the number of capital turnover of the organization over a certain period of time. This period is understood as the average period during which the return of funds invested in the production of goods or services occurs.

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

Low turnover may indicate insufficient efficiency in working with assets. Do not forget that sales profitability standards also affect this category of turnover. Thus, high profitability entails a decrease in asset turnover. And vice versa.

Equity turnover

It is calculated to determine the rate of equity capital of an organization for a particular 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 monetary turnover of invested capital, from a financial point of view - the speed of one turnover of invested funds, and from a commercial point of view - excess or insufficient sales.

If this indicator shows a significant excess of the level of sales of goods (services) over invested funds, then, as a consequence, an increase in credit resources will begin, which, in turn, makes it possible to reach a limit beyond which the activity of creditors increases. In this case, the ratio of liabilities to equity increases and 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.