One of the indicators of the financial stability of the enterprise is the presence in the structure of the balance of its own circulating assets. To determine them from the financial statements, you can apply different calculation methods.
It is necessary
Balance sheet (form No. 1)
Instructions
Step 1
Own circulating assets (SOS) characterize the amount of the organization's investments in circulating assets and are provided with its own sources of formation - capital and reserves, the value of which is determined according to the section of the same name in form No. 1 of the balance sheet. To determine your own working capital, find the difference between equity and non-current assets using the formula: COC = (p. 1300 - p. 1100) (form number 1).
Step 2
Equity capital also includes long-term loans and borrowings accounted for in section IV of the balance sheet. This is due to the fact that most often they are attracted for investments in capital construction and the acquisition of fixed assets, and these processes take time to complete and reach recoupment. If there are long-term liabilities on the balance sheet of the enterprise, use the following formula for calculating your own working capital: SOS = (p. 1300 + p. 1400 - p. 1100) (form No. 1).
Step 3
Another approach to determining your own working capital involves calculating the difference between current assets and short-term liabilities. Subtract the amount of current liabilities from the amount of current assets: COC = (line 1200 - line 1500) (form number 1).
Step 4
A positive value obtained as a result of calculations according to any of the proposed formulas means a good financial position of the organization, solvency and independence from borrowed sources of formation of current assets. A negative indicator indicates the financial instability of the company, as well as the fact that all working capital and, possibly, part of non-current assets were formed at the expense of attracted capital and are not provided with their own.
Step 5
Track the state of your own working capital in dynamics at the end of each reporting period. If there is a tendency towards a decrease in their share in circulating assets, this will make it possible to make the right management decisions in a timely manner and prevent the bankruptcy of the enterprise.
