working capital ratio - a measure that defines the minimum size of the amount of productive resources, the availability of which is sufficient to ensure the normal course of the process.This value for the business entity does not have a constant value.The ratio of current assets is directly dependent on the volume of production, as well as the service of procurement and sales, the assortment list of goods and the forms of calculations with buyers.In the financial area of the company, this figure is the most volatile.
The ratio of current assets to be calculated in money terms.The basis of determining cost estimates for the company is the production of goods, which made up for the planned timeframe.The process of calculating the index consists of a phased sequential operation.
originally to be developed regulations on reserves related to each component of working capital.These indicators are the most stable.They can only be changed in case of approval of a new assortment list of manufactured goods to enter into contracts with other suppliers, the development of technological processes and improving the organization of industrial relations.
In the second step of calculating the index determined by the amount of current resources, the volume of which is necessary in order to create the necessary continuity of the production cycle for the value of stock for each item to be included in the process.Thus, there is a definition of private standards.Each element is calculated as follows.It expresses the rate of supply of the product in circulation by means of a single element in the quotient obtained by dividing the flow rate of this component of the planned date of the value of a given period.
The ratio of current assets, calculated according to the company, is composed of the value, which is determined using summation of private indicators of stocks of productive resources.It expresses the size of the minimum amount of goods and wealth that will ensure the smooth functioning of the enterprise.
The ratio of current assets - is the sum of:
- standard stocks for production purposes;
- standard work in progress;
- issued standard of finished goods;
- standard expenses related to the forthcoming period.
indicator value reserves related to the production of products, differentiates their resources for individual species or groups of homogeneous materials.The size of this standard depends on the time the property in preparation and during the implementation process.Taking into account including insurance stocks.
The ratio of current assets in progress is in direct relation to four main factors.These include:
- the volume and composition of the products;
- time indicator of the technological cycle;
- nature of the increase in costs during the process of manufacture of the goods.
If you have the resources in the enterprise is not sufficient to bring it to the standard value, there are processes that contribute to:
- reduction of the release of goods;
- disruptions in the production and sales of finished products, and as a result, non-compliance with targets;
- violations delivery schedules of goods to customers.
In today's market conditions are increasingly growing importance of calculating ratios of current enterprise resource.Their correct application in practice is to strengthen the financial condition of the entity and its solvency.
