As well as capital turnover etc. Working capital. Functioning of working capital

An entrepreneur invests and puts capital into production not for the sake of a one-time profit, but for the purpose of continuous increase capital value. This becomes possible thanks to the very form of movement of production assets - the form of circulation. The circulation of capital ends in the same in kind, which started, and therefore can be repeated again and again.

The circulation of industrial capital (production assets), considered as a continuously repeated process, forms its turnover. Capital turnover assumes that all advanced capital will increase in value and return in its original physical form.

The time during which this process takes place is called capital turnover time. The turnover time depends on the specifics of the investment industry. In heavy industry, capital turns over, as a rule, more slowly than in light industry. For every entrepreneur it is not indifferent how soon the capital will complete its turnover. In order to reduce turnaround time, measures are being taken to rational organization production process, eliminating downtime. Technological innovations play a major role in speeding up production processes such as wood drying, painting and drying of products, and catalysis. chemical reactions etc. Reducing turnaround time also depends on the efficiency of logistics, product transportation time and the speed of its sale on the market.

If we compare the turnover time of capital with some conventionally accepted unit, for example with a year, we will get an idea of ​​the number of turnovers made by capital per year. This indicator will characterize capital turnover rate. So, if the capital turnover time is 4 months, then the turnover rate is 3 turnovers per year.

Different elements of production assets make their turnover differently. From this point of view, productive capital is divided into basic And negotiable(fixed and working capital).

Main capital. Tangible carriers of fixed capital are, as a rule, means of labor: industrial buildings, machines, equipment. The means of labor participate in the production process as a whole, but transfer their value to the product in parts as they wear out physically. This determines the characteristics of the turnover of fixed assets. In the course of turnover, there is a kind of bifurcation of their value. One part, transferred to the product, enters the circulation process, completes the circuit and returns to the entrepreneur in cash after the product is sold. As this part of the cost accumulates, it forms a fund for the replacement of fixed capital, or a depreciation fund.

The other part exists in the form of the residual value of the means of labor that continue to function in the production process. As wear and tear increases, the residual value will decrease and the replacement fund will increase. The turnover of fixed capital will be completed when all parts of its value go through their circulation and return to the entrepreneur in cash form, which will make it possible to purchase new equipment, build new plant to replace worn out old ones. In other words, all parts of capital will return to their original natural form and complete a full turnover in value.

Competition, which has intensified under the conditions of the scientific and technological revolution, forces entrepreneurs to renew fixed assets before their physical wear and tear expires. The growing threat of obsolescence of equipment has led to the spread of the practice of accelerated depreciation, which makes it possible to form a fund for the replacement of fixed capital in 3-5 years. This becomes possible due to the fact that not only parts of the cost of fixed capital actually transferred to the product due to physical wear and tear, but also a certain share of profit are allocated to the depreciation fund. This practice makes it possible to reduce taxable profits, avoid the risk of obsolescence and depreciation of fixed capital, and generate significant self-financing resources necessary for the further development and modernization of production. In many countries, the practice of accelerated depreciation is encouraged by the state in order to renew fixed assets.

In Russia in the 1990s, there was an intensive aging of fixed assets. The depreciation rate of fixed assets (as a percentage of their total value) in industry increased from 36% in the 1980s to 48.5% in 1995. For many industries, the depreciation rate in 1996 was even higher: in the oil refining industry - 63% , in the chemical and petrochemical industries - 59.7, in fuel industry - 52,6%. Average age production equipment in industry was 8.42 years in 1970, and in 1996 - already 14.9 years. In 1996, 64.3% of equipment was more than 10 years old compared to 30% in 1970. As for equipment under 5 years old, its share in 1996 was only 8.7%, while in 1970 it was 40.8%.

The renewal rate of fixed assets (introduction of new assets, as a percentage of the total value of fixed assets) decreased from 6.0 in 1990 to 1.5 in 1996. The retirement rate (liquidation of fixed assets, as a percentage of their total value) was in 1996 .also 1.5. This means that, due to new funds, it is difficult to maintain the previous size of the country's fixed assets.

Working capital. Tangible carriers of working capital are, as a rule, objects of labor (raw materials, materials, fuel) and labor power functioning in the production process.

Objects of labor are consumed entirely in their natural form during one production cycle and completely transfer their value to the finished product. After the sale of goods, the value of the objects of labor returns to the entrepreneur in cash with each circulation of capital. Next, the items of labor are reimbursed in kind to ensure the next production cycle. Low-value means of labor (small tools), which are completely consumed in the process of one circuit, complete their turnover in a similar way. Such elements of the means of labor can also be classified as working capital.

Labor power in the production process does not transfer its value to the product either immediately or gradually. She creates new value. However, in terms of the nature of turnover, variable capital does not differ from working capital. The cost of labor reproduced during one production cycle, after the sale of the goods, returns to the entrepreneur in cash and can be used to hire labor in the next production cycle.

It should be noted that productive capital, both fixed and circulating, includes only its material elements and labor power that actually function in the production process. Such a phenomenon as purchasing materials, semi-finished products, components, equipment for future use does not fit into the practice of rational economic management and leads to the death of capital and a decrease in the speed of its turnover. The spread of contractual relationships that guarantee deliveries accurate to the day and hour allows modern enterprise work “from wheels” when minimum stock raw materials and supplies.

B. BEHAVIOR OF AGENTS IN THE MARKET FOR FACTORS OF PRODUCTION

• See: Russian statistical yearbook. 1997. M., 1998. S. 339, 340.

Formation cash flows enterprise is inextricably linked with the theoretical concept of capital flow. The essence of this concept is that functioning capital in the process of its use is in constant motion both within the framework of the activities of individual business entities and in economic system the country as a whole. This movement of capital in the economic process is accompanied by a constant modification of its forms. The process constant movement characterized in economic theory the term " capital turnover"The turnover of capital is understood as the process of its continuous movement in the economic system, accompanied by the consistent transformation of one of its forms into another.

The work of many economists is devoted to the study of the turnover of capital in the process of its use. various schools. The greatest contribution to the development of the theory of this issue was made by A. Smith, D. Ricardo, K. Marx, Boehm-Bawerk, J. Keynes, J. Hicks, K. Wicksell. These studies made it possible to identify the main characteristics of the economic essence of the category “capital turnover”, which are receiving a certain development at the present stage.

• Capital turnover is the most important condition its functioning in the economic system, ensuring the constant generation of income or self-increase in its value. If capital did not undergo constant turnover in the process of its use with modification of specific forms, it could not generate income for its owner.
• The turnover of capital as a process of its constant movement is characterized by certain repeating cycles. The capital turnover cycle is understood as the process of complete completion of the circulation of its individual forms, as a result of which the advanced capital, in the process of its economic use, returns in its original form. Taking into account the above concept, the turnover of capital in the process of its use can be considered as a set of constantly repeating acts of its circulation (circulation of its forms) or as a constant change of individual cycles of its turnover).
• As part of each complete cycle of capital turnover (or completed cycle of its circulation), its individual stages are distinguished. The stage of turnover (circulation) characterizes the period of capital being in one of its specific forms before the beginning of its transformation into another functional form. Features of economic use various types capital determine the specifics of the content of its turnover cycles in the context of individual stages (forms of functioning in the process of individual acts of circulation). The most significant differences in the stages (forms) of the circulation are inherent in capital used in production and investment process.
• Capital used in production process(as a factor of production), throughout its circulation it functions in three main forms - monetary, productive and commodity (Fig. 1.7).

Fixed production capital in the process of a full circulation cycle goes through three stages:

1. At the first stage, fixed production capital in monetary form (OKd) is advanced into the means of labor, accordingly taking the form of productive fixed capital (OKPr).
2. At the second stage, fixed capital in productive form (OKPR) gradually transfers its value in parts to the extent of its depreciation (i.o.c.) to manufactured products (goods, services), transforming into a certain part of commodity capital (OKt). This process is carried out over many production cycles and continues until it is completely worn out. individual species means of labor into which fixed capital is advanced.
3. At the third stage in the process of selling products, its component part of the value of fixed capital in commodity form (OKt) is converted into fixed capital in cash (OKd), which is called the “depreciation fund (AF). As the funds of the depreciation fund accumulate, fixed capital in cash form is again ready for an advance on means of labor, carried out by repairing them or purchasing new analogues.

Working capital in the process of a full circulation cycle goes through four main stages:
At the first stage, working productive capital in cash (0BCD) is advanced into objects of labor (raw materials, supplies, semi-finished products, etc.), while taking the form of productive working capital.

At the second stage, working capital in productive form (OBKpr) completely transfers its value to manufactured products (goods, services), transforming into the predominant part of commodity capital (0BKT). This process is carried out during each production cycle.

At the third stage in the process of selling products, its component part of the cost of working capital in commodity form (0BKT) until the receipt of funds from buyers is converted into working capital in financial form (0BKf), which is called “accounts receivable for delivered products.”

At the fourth stage, working capital in financial form (0BKF), through the collection of receivables (repayment by buyers), is again transformed into working capital in cash form, ready for advances into objects of labor for the next production cycle.

Thus, working capital in the process of the full cycle of its circulation, it is consistently transformed into productive, commodity, financial and monetary current assets.

• Capital used in the investment process (as a realizable investment resource) throughout its circulation functions in various forms, determined by the nature of the objects of its investment. On this basis, capital investment is divided into real investment objects and into objects financial investment.
• The circulation of capital invested in real investment objects (real investment projects), is carried out in the same forms (goes through the same stages) as productive capital. This is due to the fact that the objects of real investment of capital are associated with the implementation of production activities of individual business entities.

Circulation of capital invested in financial investment objects(relevant financial instruments), consists of two main stages:

1. At the first stage, the capital used in the investment process in monetary form (Kd), in the process of acquiring relevant financial assets (financial investment instruments) is transformed into a financial form (Cf) and functions in the form of a portfolio of financial investments formed with the aim of generating income.
2. At the second stage, as investment income is received (in the form of dividends, interest, etc.), as well as the sale of individual financial instruments of the portfolio, the capital used in the process of financial investment is again transformed from the financial form (Cf) into the monetary form (Cd) . Capital gain in the process of financial investment (Kd->Kd) occurs due to the current receipt of income from individual financial assets, the increase in the exchange rate value of individual financial instruments, as well as the implementation of arbitrage (speculative) operations in the financial market.

The full cycle of one turnover of capital is characterized, on the one hand, by its duration in time, and on the other, by the change in the total amount of capital in the process of each turnover. These characteristics are inherent in capital used in both the production and investment processes. Both of these characteristics are various sides reflect the efficiency of capital turnover of a particular business entity.

The duration of one capital turnover characterizes the period of time during which full cycle its circuit. It is determined by dividing the average amount of capital used by the enterprise by the average annual (average monthly, average daily) volume of sales of its products. To calculate the average amount of capital involved, as a rule, its average chronological value is used. Using the indicated fundamental algorithm, the duration of one turnover can be calculated not only of capital as a whole, but also of each of its forms, determined by the corresponding stage of the circulation process.

On duration capital turnover is influenced by the following main factors:

• ratio of fixed and working capital used;
• the ratio of active (machinery and equipment) and passive (buildings and structures) parts of production fixed assets;
• working capital structure;
• methods and rates of depreciation of fixed assets and intangible assets used;
• average duration of the production (operational) cycle;
• the ratio of real and financial investment volumes;
• stage of commodity market conditions that determines the intensity of product sales.

The change in the total value of capital during one full turnover is characterized by the term “value cycle of capital”9 [“value cycle of capital”]. The movement of the cost cycle of capital of a particular business entity occurs in a spiral (Fig. 1.8).


As can be seen from the figure above, capital in the process of each of its circulation (value cycle) can increase its total value in separate periods (in the figure - periods II, III and V) as a result of its profitable use or partially lose it (in the figure - period IV) as a result of unprofitable economic activity. In other words, the value cycle of capital in the process of its turnover can develop with an upward or downward trend. The movement of the capital value cycle serves as an important indicator of the pace of development of a particular business entity, the dynamics of its market value and competitive position.

The dynamics of the cost cycle of capital in the process of its turnover are influenced by the following main factors:

• stage economic cycle country development;
• the level of average rate of return on capital;
• level of taxation of business entities;
• the level of competition in the market for products manufactured by a business entity;
• stage life cycle enterprises;
• efficiency of use of production (operating) assets formed from the capital advanced in them;
• efficiency of investment activity of a business entity;
• level of risk in the activities of a business entity;
• financial flexibility of a business entity, characterizing its ability to attract the necessary financial resources from external sources.

Indicators characterizing capital turnover have a wide range of use in practice economic activity individual business entities. These indicators serve as a guide in the process:

• establishing the capital intensity of a new business when justifying an investment project;
• determining the market value of the enterprise and justification management decisions on its increase;
• developing a depreciation policy for a specific business entity;
• carrying out an appropriate dividend policy (policy of distribution of profits received);
• making management decisions regarding the issue of shares or bonds;
• rationing of current assets and justification of the policy for their financing.

The important role of capital turnover indicators in organizing cash flows and ensuring the efficiency of business activities determines the need for their inclusion in the system of basic target standards strategic development enterprises.

Working capital- these are the funds that a company has in the process of conducting its business, spent during the production cycle, that is, that part of the capital that allows the uninterrupted production and sale of the product.

In the case when the functioning of the production and trading cycle is not disrupted, working capital is part net assets in circulation, or current assets.

In material circulation, fixed and circulating capital are what is meant by general concept capital. The first includes those factors of production that have a long service life, while the second is consumed in one cycle.

What does working capital consist of?

Working capital consists of:

• Working production assets
• circulation funds

Production assets consist of inventories(this could be raw materials, materials, fuel, etc.), unfinished production, as well as costs for subsequent production.

Circulation funds are funds that are necessary for the circulation process to have the resources necessary for its functioning, as well as to serve the circulation of the company’s funds.

The components of working capital are arranged according to the principle, that is, the ability, if necessary, to convert the enterprise’s funds into cash. This indicator determines the stability of the company's financial condition.

Functioning of working capital

Continuously renewable production reflects the non-stop functioning of working capital.

In the first stage (procurement) of the rotation of working capital, money becomes industrial reserves.

At the second stage (production) it is created New Product. Consequently, value passes again, but from productive value to commodity value.

At the third stage (marketing), manufactured products are sold, and working capital again turns into money and thus returns to the first stage of the circuit.

If, upon returning capital to its starting point, its growth is observed, we can talk about the efficiency of capital turnover. In quantitative terms, it is measured by the income received. The more effective working capital management is, the greater the increase in profitability will occur.

Since the value of working capital is first transferred to the product and then returned again in the form of money in one turnover, it also includes objects of labor, tools subject to wear, as well as wages.

Sources of working capital formation

Working capital can be formed from own, borrowed and additionally attracted capital.

Equity is the difference in the value of assets and liabilities. It consists of the company's funds and savings, as well as long-term liabilities. Normally, working capital should be equal to about a third of fixed capital.

Own working capital is that component of equity capital with the help of which current assets are financed.

Borrowed capital is those funds that do not belong to the company, but are attracted by it to carry out its activities. It also consists of debts, which means those funds that the company uses temporarily.

As a rule, it is considered optimal when 50% is own and 50% is borrowed working capital.

Since working capital must make production continuous, to determine its size, organizations must know exactly not only production needs, but also what funds are needed to ensure circulation.

To do this, it is precisely calculated how much working capital the company needs and the time spent by capital in the spheres of production and circulation is determined.

Capital turnover in days, number of turnovers and inverse turnover ratio must be calculated to estimate the working capital turnover.

When a company uses all possible and available sources to provide its current assets, covering expenses, this is pure working capital. Its value shows the part of working capital for which financing is taken from long-term sources, that is, does not need to be used to pay off current debts.

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Darron Kendrick - teacher accounting and Law from the University of North Georgia. Received a master's degree in tax law from Thomas Jefferson School of Law in 2012 and became certified by the Alabama Board of Public Accountants in 1984.

Number of sources used in this article: . You will find a list of them at the bottom of the page.

Working capital is the totality of cash and liquid assets that are needed to finance the company's activities. Knowing the amount of working capital, you can manage your company more effectively and make investment decisions. The value of working capital characterizes the ability and speed of repayment of the company's current obligations. If a company has no or very little working capital, then most likely it will not be successful. Working capital calculation is also useful for estimating effective use company resources. Formula for calculating working capital:

Working capital = current assets - current liabilities

Steps

Part 1

Calculate current assets. Current assets are assets that can be converted into cash within one year. These assets include cash and short-term capital. For example, accounts receivable, deferred expenses, and inventory are current assets.

• Typically, current assets and their total value are shown on the company's balance sheet.
• If the balance sheet does not show a total of current assets, review the entire statement and look for items that relate to current assets. Add the values ​​of the items that meet the definition of current assets to obtain the total value of current assets. For example, add up the following balance sheet items: Accounts Receivable, Inventory, and Cash and Cash Equivalents.

1. Calculate current liabilities. Current liabilities are liabilities that must be paid within one year. Current liabilities are current liabilities, accounts payable and short-term debt.

   • Typically, current liabilities and their total are shown on the company's balance sheet. If the balance sheet does not show a total of current liabilities, review the entire statement, find the items that relate to current liabilities, and add their values. For example, add up the values ​​of the following balance sheet items: “Accounts payable”, “Unpaid taxes”, “Short-term loans”.

2. Calculate working capital. To do this, subtract the value of current liabilities from the value of current assets.

Part 2

Calculate the liquidity ratio. To analyze the financial condition of a company, many financiers use the current ratio. To calculate the current ratio, you need to know current assets and current liabilities, but as a result you will receive not an amount in rubles, but a ratio.

Analyze the company's financial condition using the current ratio. This ratio characterizes the company's ability to repay its current financial obligations, that is, pay its bills. As a rule, this coefficient is used in the analysis different companies or industries.

1. Working capital management. Company managers must monitor the values ​​of working capital in order to maintain them at an optimal level. These quantities are warehouse stocks, accounts receivable and accounts payable. Managers should evaluate possible positive and negative points related to excess or shortage of working capital.

   • For example, a company that lacks working capital will not be able to pay current obligations. On the other hand, excessive working capital is also a negative indicator since excess capital should be invested in the development of the company to increase its profitability. For example, excess working capital can be invested in acquiring additional production capacity or increasing the number of stores retail. Such investments will lead to an increase in the company's income.
   • If your company has an excess or shortage of working capital, read the Tips section to learn how to reduce or increase the amount of working capital.