Material working capital ratio formula on the balance sheet. Working capital

1. Turnover in days (duration of one revolution) - shows the number of days during which current assets complete a full circulation:

T - calendar number of days in the period;

Ko - turnover ratio working capital;

Вр - sales revenue;

Average working capital balances.

2. The working capital turnover ratio characterizes the number of turnovers made by working capital during the analyzed period.

There is an obvious relationship between these two turnover indicators.

3. The amount of working capital per ruble of products sold (fixation ratio) is the inverse of the turnover ratio. It is determined by the formula:

Turnover can be calculated for all current assets and for their individual types.

Calculation of turnover individual species working capital makes it possible, to some extent, to determine the contribution of each division of the enterprise to increasing the efficiency of using working capital.

In each case, the actual turnover of one period is compared with a similar indicator for another period to identify the degree of acceleration or deceleration of turnover and the amount of funds additionally involved in turnover or diverted from turnover.

Also, when analyzing normalized working capital, actual turnover can be compared with planned turnover.

1. Turnover of funds in settlements (accounts receivable) (in turnover).

Defined as the ratio of sales revenue to average accounts receivable. Shows the expansion or decline of commercial credit extended by the business.

SDZ - average accounts receivable

2. Turnover of funds in settlements (in days) – characterizes average term repayment of receivables, the reduction in the ratio is positively assessed.

3. Inventory turnover (in revolutions) – reflects the number of inventory turnovers and costs of the enterprise for the analyzed period. A decrease in the ratio indicates a relative increase in inventories and work in progress.

4. Inventory turnover in days is determined by the formula

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Let's figure out how to act and where to find indicators. To produce goods, it is not enough to use means of labor (machines, equipment) and employ workers.

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

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

Objects of labor and money make up the company's working capital. But you need to determine the value of such an indicator and know how to write off working capital.

Basic moments

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

What it is

Working capital is the totality of funds that are turned over and monetary funds in circulation. Revolving funds presented:

• raw materials;
• basic and auxiliary materials;
• components;
• unfinished production facilities;
• container;
• other objects of labor.

Why is it needed?

The inventory turnover ratio reflects the number of times the company has used average the available balance of working capital in the analyzed period.

According to the balance sheet, current assets consist of:

• stocks;
• money;
• short-term financial investments;
• short-term receivables taking into account purchased assets.

The values ​​can characterize what proportion of current assets and total assets are and how effectively they are managed.

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

Indeed, with the rapid turnover of company funds, the gap between invested funds in manufacturing process and receiving.

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

Regulatory regulation

It is important to study the provisions:

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

How to determine the working capital turnover ratio

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

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

What does it characterize

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

The turnover ratio is financial indicator to determine how effectively assets and liabilities are used.

It is able to show the business activity of the organization. If the asset turnover ratio is three, it means that the company receives revenue per year that is three times the value of the assets.

Since turnover rates may depend on the industry, it is worth understanding that in a trading company with a large volume of revenue, turnover will be higher.

If the industry is capital intensive, a lower value will be obtained. But it is not correct to assume that turnover will indicate operational efficiency and profitability.

But when carrying out comparative analysis ratios of two organizations, you can see the difference in the performance of asset management.

If the debit debt turnover rate is higher, it means that payments from customers are collected efficiently.

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

In order for such a goal to be achieved, it is necessary to constantly have a certain amount in the account, which is actually withdrawn from circulation. Current payments are made using these funds.

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

To do this, maintain size and structure current assets, borrowed and own working capital.

What are the types

The most popular ratios in financial plan analysis:

Turnover of current assets	What is represented by the ratio of the proceeds of an enterprise in general to the turnover of the amount of assets of the organization for a specific time
Inventory turnover	What shows how management uses jumps in profit and cost figures
Accounts receivable turnover	This coefficient will allow you to calculate how much debit debt has been generated
Accounts payable	What is necessary for the lender, as it allows you to determine whether payment of the company’s loan is possible
Assets	What determines the indicators of many financial turnovers
Firm's equity	What can show the effectiveness of the use of funds by an organizational unit

Formula applied

What positions characterize the coefficient? The indicator depends:

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

A higher value is typical for trade organizations, and less for capital-intensive research firms.
The formulas are directly proportional equations that are easy to understand.

If you can’t figure them out, you can always contact a specialist who can help with the calculations

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

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

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

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

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

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

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

What are the features of calculating the capital turnover ratio of a company? Certain rules There is no such thing as an average value.

Each organization produces its own values, which will vary (depending on the industry). But there is a direct relationship - the higher the coefficient, the higher the return on capital will be.

The formula is:

The company must be able to use intensively inventories and costs to its advantage. Use the formula:

If received great importance, which means the company does not have enough inventory. As a result, unnecessary waste appears.

Formula for determining the debit debt ratio:

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

When determining the loan debt turnover ratio, use the formula:

The result will show how intensively the company repays its debts. Can't be certain general meaning coefficients

They are analyzed over time or compared with the indicators of another enterprise in this industry.

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

The turnover of mobile funds will be fast and there will be more proceeds. As turnover accelerates, other performance indicators improve.

Disadvantage - if there is a lot of inventory, it is necessary to organize storage space, which will entail additional costs.

By accelerating turnover, productivity will increase, which means more employees.

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

This means that even before planning to increase the ratio, it is worth adjusting the potential profits and costs, which will also increase.

When might turnover decrease? – If the duration of turnover increases due to an unjustified increase in inventories, the emergence of customer debts, and production failures.

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

How to calculate by balance

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

The available information will allow you to find out the value for the year. Any other period cannot be determined from the balance sheet information.

The following formula is relevant:

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

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

Examples of calculations

For example, in a year the company sold 5,000 units of products. The cost of one unit is 180,000 rubles. Selling price exceeds cost by 15 percent.

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

This means that for one ruble of goods sold there are 14 kopecks. value of working capital inventories. One revolution lasts:
Here's another example. The Stepashka organization in 2014 had a profit of 249,239 rubles. The asset turnover indicator at the beginning of the year was 48 thousand rubles, at the end - 34 thousand.

The duration of one revolution or turnover of working capital.

The duration of one revolution is the sum of the residence time working capital in the sphere of production and in the sphere of circulation, starting from the moment of acquisition of inventories and ending with the receipt of proceeds from the sale of products.

The shorter the circulation period, the less working capital the company requires, and therefore, reducing the duration of one turnover leads to increased efficiency in the use of working capital and an increase in their return.

There are the following formulas by which working capital turnover is determined: (methods):

1. OBok = Sok (average working capital): VR (sales revenue) / D (time period)

2. OBok = D/Kob (turnover ratio)

3. OBok = D*Kz (load factor)

Turnover rate (number of turns in a certain period)

The direct working capital turnover ratio reflects the number of turnovers made per year.

Kob = BP/Sob (average value of working capital)

The turnover ratio shows the amount of sales commercial products per one ruble of working capital

An increase in the coefficient means:

1. Increase in speed

2. Increase in production output for each invested ruble of working capital

3. The same volume of production requires less working capital.

Load factor shows the amount of working capital spent on each ruble of sold (commodity products), shows the availability of working capital.

Kz = Sob/RP(BP)

Result: Comparing these indicators and coefficients over time allows us to identify trends in how efficiently and effectively working capital is used.

Along with general turnover indicators, private ones are calculated, which allow for an in-depth analysis of the use of working capital

Inventory = PO (production costs)/ Z(average inventory)

Work in progress = Goods in stock/ NP(average annual volume of work in progress)

ABOUT finished products = RP (volume of products sold (shipped))/ GP(average annual value of finished products)

OB in calculations = BP/ DZ(average accounts receivable)

The effect of accelerating turnover is expressed as follows:

1. The need for working capital is reduced

2. Resources are released, which are used either for production needs or for accumulation in current accounts

3. Solvency improves and financial condition enterprises

The less working capital is used in production, the better.

There are two types of release of working capital as a result of accelerating their turnover:

1. Absolute release - direct reduction in the need for working capital to achieve the planned production volume

2. Relative release means that with the planned need for working capital, the production plan is exceeded (ensures)

The working capital turnover ratio shows how many times the company used the average balance of working capital during a selected period of time. In this article we will use examples to understand how to correctly calculate and evaluate the indicator. We have also provided a procedure for analyzing turnover, which can be downloaded.

What is the working capital turnover ratio

The turnover ratio of working capital (assets) is an indicator that allows you to understand how many times the company used the average annual balance of working capital for a selected time interval.

CFOs analyze this indicator over time, in comparison with industry averages.

Calculation formula

The indicator is calculated using the following formula:

Working capital turnover ratio = Revenue (rub.) / Current assets (rub.). .

How to find a balance sheet

Calculation formula based on balance sheet data:

Ratio Analysis

The turnover ratio is analyzed:

• in dynamics,
• in comparison with industry averages, for example with the industry average turnover period.

A too low ratio, not justified by industry characteristics, indicates excessive accumulation of working capital. There are no generally accepted, let alone legally established standards, but this does not prevent them from being put into effect by internal administrative documents as target values ​​or key performance indicators.

Working capital turnover period

To analyze working capital, it is often more convenient to calculate the turnover period - the reciprocal of the turnover ratio:

Working capital turnover period (days) = Number of days / Turnover ratio

This is a more visual indicator, it is measured in days and shows us how many days the company receives revenue equal to average working capital. When turnover slows down, the turnover period increases, and when it accelerates, it shortens. If we calculate the turnover period for two different time intervals and compare them, we will be able to determine the amount of additionally needed, or vice versa, released Money.

Special mention should be made about the time interval for calculation. Turnover ratios are calculated over a certain period of time. It doesn't have to be whole year, as they say in textbooks. To solve practical problems, you can calculate both for half a year and for a quarter, the main thing is that this interval is sufficiently indicative and includes all factors significant for the production process. Which interval to choose depends on the industry, type of product, duration of the production cycle and terms of mutual settlements, and so on.

Calculation example

Now let's explain all of the above with an example. Suppose our enterprise produces products for which demand has significant seasonal fluctuations. During the year, the company received revenue (see table 1).

Table 1. Annual revenue of the enterprise

The average inventory during this year is presented in Table 2.

table 2. Average inventory

Let's calculate the inventory turnover ratio for the year. To do this, divide the revenue for the year by the average annual inventory.

Turnover ratio for the year = 114,830 / 36,411 = 3.154

We find that the indicator for the year is 3.154.

Let's determine the turnover period.

Turnover period = 365 days / 3.154 = 115.7 days.

It is in 115.7 days that we receive revenue equal to the average annual inventory. What will this give us in practice? We can only compare these figures with those of the previous year or go to competitors. If they tell us that their inventories turn over at approximately the same speed, we can rest assured that our indicator corresponds to the industry average.

If we calculate the data for each quarter, we get Additional information(see Table 3).

Table 3. Calculation of turnover ratios for each quarter

We see that inventory turnover varies greatly throughout the year. This will become even more clear if we translate the dimensionless coefficient into the turnover period (Table 4).

Table 4. Turnaround period

It turns out that the turnover rate during the year can change by one and a half times. And this can already say a lot. For example, if a company sells goods with deferred payment, then its most acute need for working capital will be at the end of the second and third quarter. If there is no deferment for buyers, then a shortage of working capital is possible from the end of the first and throughout the second quarter.

Thus, to determine the need to attract additional working capital by the beginning of the “high” season, turnover ratios should be calculated not for the year, but for the quarter.

Then we will have a completely natural desire to speed up inventory turnover in the first half of the year. To do this, it is necessary to detail the calculations by type of goods. We download the corresponding balance sheets from the program or request from the accounting department and after some processing we receive revenue for the goods (Table 5).

Table 5. Revenue by goods ()

Revenue, million rubles	I quarter	II quarter	III quarter	IV quarter	Total for the year
Product "A"
Product "B"
Product "B"

We average inventory and obtain the following data (Table 6).

Table 6. Average stock

Average inventory, million rubles.	I quarter	II quarter	III quarter	IV quarter	Total for the year
Product "A"
Product "B"
Product "B"

We divide the revenue for goods by the average stock, we get the turnover ratio (Table 7).

Table 7. Turnover ratio

Turnover ratio	I quarter	II quarter	III quarter	IV quarter	Total for the year
Product "A"
Product "B"
Product "B"
By product group

And now we discover that product “B” is an outsider, its turnover is two or more times lower than that of product “B” and product “A”. For greater convenience, let us convert the dimensionless coefficients into turnover periods (Table 8).

Table 8. Turnaround period

Turnaround period	I quarter	II quarter	III quarter	IV quarter	Total for the year
Product "A"
Product "B"
Product "B"
By product group

Now we see that turnover changes not only for different products, but also each product turns over at a different rate during the year.

Next, you need to find out what the reasons for such fluctuations in turnover are. If these reasons are objective and fully justified from a business point of view, then you should plan to attract additional funds, when it is necessary. If the reasons are subjective, then organizational measures must be taken to eliminate them. At this stage, the financial analyst needs to demonstrate the ability to effectively interact with management and other departments, and the financial director needs to demonstrate his management talents.

conclusions

Turnover ratios in in capable hands become effective tool problem solution financial stability enterprises (

Instructions

The turnover of assets is their transformation from material and material form into monetary form. Turnover speed is the number of revolutions in a given period of time. This speed is the ratio average cost working capital to revenue or cost of products, works, services for the analyzed period.

To determine the rate of turnover of working capital, use the following algorithm:
- calculation of the turnover ratio of current assets or their individual components;
- calculation of the turnover period.

Determine the turnover ratio of total current assets using the formula:
Kvol.a = (Revenue)/(Average value of current assets)
Then calculate the turnover rate by dividing the number of days in the period by the resulting turnover ratio. For convenience, round the number of days to the nearest ten: 30, 90, 180, 360.

Analyze the turnover rate of individual elements of current assets using the same principle. To do this, first calculate the average values ​​of assets by adding ½ the sum of the indicators at the beginning and end of the period, as well as whole intermediate values, and dividing the resulting value by the number of reporting dates.

Calculate turnover ratios:
- inventories: K oz = (Revenue)/(Average inventory) or K oz = (Cost)/(Average inventory);
- accounts receivable: K odz = (Revenue)/(Average value of receivables) or K odz = (Amount of repaid receivables)/(Average value of receivables);
- cash: K ods = (Revenue)/(Average amount of cash) or K ods = (Amount of cash outflow)/(Average amount of cash).

The next step is to calculate the turnover rate of elements of current assets using the following formulas, where T is the turnover period, D is the number of days in the period.
Reserves: T = D/K lake. This indicator characterizes the average shelf life of inventories, finished products or goods, as well as the production period;
Accounts receivable: T = D/K odz. The value shows the period of settlements between debtors and the company;
Cash: T = D/K ods. The result reflects the number of days that, on average, pass from the moment money arrives in the current account until it is released to pay obligations.

Sources:

• determination of turnover time
• Duration of one revolution

Tip 2: How to calculate working capital turnover

Negotiable facilities- these are the ones facilities enterprises that are advanced into the production process continuously and are returned in the form of revenue in cash, i.e. precisely in the one in which they began their movement.

Instructions

To analyze the turnover of working capital, a number of coefficients are used. The main ones are the average duration in days, the turnover ratio - the number of revolutions made facilities mi for a certain period, the amount of employed working capital that falls on manufactured products is the working capital load factor.

The first indicator is the average duration of one revolution, characterizing the time during which the circulating facilities go through the production cycle: from the moment of purchasing materials to the moment of selling products made from these materials. It is calculated as the ratio of the product of the average balance of working capital and days in the reporting period to sales revenue for this period (month, quarter, year). In other words, the average balance of working capital to the one-day volume of revenue.

The second indicator of working capital turnover, the turnover ratio, can be calculated as the ratio of the volume of products sold to the average balance of working capital. It can be found in another way. This will be the ratio of the number of days in the period under consideration to the average duration of one revolution.