In a market economy, stabilityposition of the company is largely due to its activity in the work, which depends on business reputation, efficient use of resources, breadth of sales markets, economic sustainability.
In financial terms, the company's activity is manifested by the speed of its funds turnover, which can be analyzed by the turnover ratio of current assets and other indicators.
The importance of indicators that characterize the turnover of funds, is explained by the fact that they show the profitability of the company.
Asset Turnover Ratio(resource return) allows you to see the turnover speed of the company's total capital in the aggregate. It shows how many times a complete cycle of circulation and production is carried out for the period under consideration, or how many monetary units each unit has given.
The turnover ratio is calculated by dividingnet proceeds from sales, by the average annual cost of capital. This indicator allows us to assess the effectiveness of the use of assets regardless of the sources of their formation. The determination of the resource return indicator shows the amount of profit received from each ruble invested in the assets.
On the speed of turnover depends on the financial conditionfirm, its liquidity and solvency. The most important indicators of resource efficiency are the period and rate of turnover. The latter shows how much capital turnover occurred over a certain period of time. The average period for which the return of invested in commercial operations or production of funds will occur is called the period of turnover.
Low turnover (goods, for example) indicates a low efficiency of the firm's assets.
Coefficient of turnover of circulating assets
Characterization of the turnover speed from the moment of paymentbefore the return of money for the realized material values to the bank account, the turnover of the funds (negotiable) appears. Their amount is calculated on the basis of their total size, subtracting the balance of monetary assets on the current account.
Coefficient of turnover of circulating assetsalso calculate the ratio of gross income (revenue) from the sale of goods to the amount of circulating assets of the firm. The calculation does not include VAT and excise tax. With a decrease in this indicator, we can say that there is a slowdown in turnover.
If there is an acceleration of turnover at constantvolume of sales, the company will have to use a smaller number of working capital. With increasing turnover, the company spends less amount of return funds, which allows it to use material and monetary resources more efficiently. Circulating assets released from production can be used in other industries. Thus, the turnover ratio of current assets shows the whole set of processes in the company's activities: a decrease in capital intensity, an increase in productivity growth rates.
The main factors affectingturnover of current assets, reduce the duration of the general technological cycle, improve the terms of sale and supply, improve the organization of production and technology, clear organization of settlement payment relations.
Accounts receivable turnover ratio
Enterprises in the process of work have to givecommodity loans to consumers, as a result, accounts receivable are accumulated. The indicator of its turnover determines the number of revolutions per year of funds invested in the calculations.
