The rate of turnover of working capital characterizes the efficiency of using the assets of the enterprise and the time during which they complete a full turnover. This indicator is calculated as a whole by the amount of working capital and by individual elements: stocks, accounts receivable, cash.
Instructions
Step 1
The turnover of assets is their transformation from a material and material form into a monetary one. The turnover rate is the number of revolutions in a given period of time. This rate is the ratio of the average cost of working capital to the proceeds or cost of products, works, services for the analyzed period.
Step 2
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.
Step 3
Determine the turnover ratio of total current assets using the formula:
K vol.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 exactly ten: 30, 90, 180, 360.
Step 4
Analyze the rate of turnover of individual elements of current assets according to the same principle. To do this, first calculate the average values of assets by adding ½ the sum of indicators at the beginning and end of the period, as well as integer intermediate values, and dividing the resulting value by the number of reporting dates.
Step 5
Calculate the turnover rates:
- reserves: K oz = (Revenue) / (Average value of reserves) or K oz = (Cost price) / (Average value of reserves);
- accounts receivable: K odz = (Revenue) / (Average amount of receivables) or K odz = (Amount of repaid receivables) / (Average amount of receivables);
- cash: K ods = (Revenue) / (Average value of cash) or K ods = (Amount of cash outflow) / (Average value of cash).
Step 6
The next step is to calculate the rate of turnover of the elements of current assets using the following formulas, where T is the period of turnover, D is the number of days in the period.
Stocks: 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 of debtors with the enterprise;
Cash: T = D / K ods. The result reflects the number of days that, on average, elapse from the moment the money is received in the current account until its disposal to pay off the obligations.
