Current assets are those assets of the enterprise that are continuously advanced into the production process and returned in the form of cash proceeds, i.e. exactly in the one in which they began their movement.
Instructions
Step 1
A number of coefficients are used to analyze the turnover of working capital. The main ones are the average duration of one turnover in days, the turnover ratio is the number of revolutions made by working capital for a certain period, the amount of working capital employed, which falls on 1 ruble of manufactured products - the working capital load factor.
Step 2
The first indicator - the average duration of one turnover, characterizes the time during which the circulating assets 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 the number of days in the reporting period to the proceeds from sales for this period (month, quarter, year). In other words, it is the ratio of the average balance of working capital to the daily volume of proceeds.
Step 3
The second indicator of the turnover of working capital - 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.
Step 4
The load factor or the amount of employed working capital per 1 ruble of products sold in value terms is defined as the ratio of the balance of working capital to the volume of proceeds from the sale of products received in a given period. This indicator allows you to determine how much working capital (in kopecks) falls on the production of 1 ruble of revenue.
Step 5
More often than others, the first coefficient is used to analyze the turnover of working capital. As a rule, it is determined per year. Turnover indicators are analyzed in dynamics, compared with previous periods and indicators of other enterprises in the same industry. By the way these ratios have changed, it can be concluded that the rate of turnover of funds in the organization has slowed down or increased.
