Coefficient of turnover and turnover of working capital

From the course "Enterprise Economics", each graduate of the Economics Faculty knows that working capital is a kind of aggregate of various production assets and funds of circulation, not in kind, but in money terms. The activities of any firm should be evaluated properly, often for this purpose analyze statistical information, specifically the turnover ratio . The main task of production assets is the maintenance of the sphere of production in the enterprise, and circulation funds are engaged in the corresponding sphere. It is also known that the most basic conditions for efficient production and sale of products require the constant availability of inventories in production warehouses. These values are mainly consumed directly in the production process, as well as when storing or servicing already finished products. To characterize the statistical data in the enterprise, the turnover indicators are constantly used.

Proceeding from this, the current assets can be called those assets of the enterprise, which in the process of production are able to fully transfer their own value to the created product, but they can only participate once in such a process, after which they lose their original form or change it.

These indicators provide an opportunity to analyze the dynamics of the activity of the enterprise and form a further development policy. One of such indicators experts call the coefficient of working capital. With its help, you can find out how much current assets per unit of commodity output. Determine this coefficient is easy enough, you just need to calculate the ratio of the average balance of current assets to the total volume of products sold by the enterprise.

Based on this, it can be concluded that there is an inverse measure that would describe the number of turnover of the assets of the enterprise for a certain period. This indicator is the turnover ratio, which is calculated as the ratio of the volume of sales to the average value of the balance of current assets on the balance sheet of the firm.

This ratio is a financial indicator of the intensity of use of the liabilities of the enterprise or its assets, that is, the speed or the number of their turnover for the selected time.

The turnover ratio can have several variations, among them the following are distinguished:

1. The ratio of revenue for the year to the average value of current assets is the turnover of current assets.

2. The ratio of annual sales proceeds and the value of stocks - inventory turnover.

And there are a lot of such coefficients, because this universal indicator makes it possible to analyze the flow of all the assets of the enterprise and identify the most necessary or, conversely, unnecessary resources.

That is, if in the calculation it was revealed that the annual turnover ratio of any assets is three, then this means nothing more than the number of turns of these resources for twelve months.

It is also worth paying attention to the indicators of the normalization of working capital, which are used as the development and formation of norms and norms for spending assets, which are necessary for the constant availability of minimum stocks in the enterprise. All means of the firm can be divided into normed and non-standardizable. At the same time, the first include production stocks, and the second - the cash assets, finished products, as well as accounts receivable.

Current assets occupy an important part among other assets of the enterprise, therefore their analysis is an integral part of the formation of plans and forecasts for the production of products, as well as its implementation.