Current assets (OS) - these are the funds of the enterprise or company, which can be renewed with a given frequency and serve to ensure the activity at this current point in time. The minimum with this turnover is one turnover of funds at least. Other turnaround times may also be used. This can be a calendar year, a fiscal year, or the production cycle of an enterprise. An important analysis of the structure of working capital to understand their role in the economic process.
According to the traditional classification, they include two categories: revolving funds and circulation. The first category includes inventories, work in progress and semi-finished products, as well as funds planned for use in future periods.
Inventories include spare parts, raw materials, various additional production materials, and more. Their size is established for reasons of ensuring the rhythmic operation of the enterprise.
Work in progress is materials, parts and products that are still in the manufacturing process.
The costs of developing advanced technologies and marketing constitute a group of deferred expenses.
The analysis of the sources of formation of working capital ranks the following funds :
- finished products ;
- goods already shipped to the consumer;
- all funds in accounts;
- funds in the calculations with consumers and suppliers.
This structure shows the share of some specific OS components in the total aggregate of funds.
OS management issues are a pretty topical issue. Analysis of working capital turnover is increasingly becoming the subject of research in the framework of economic science. This is due to the fact that unique solutions, the most modern concepts and technologies of financial management become the most demanded business practices. It is the analysis of working capital turnover that serves to adequately determine the financial condition of a company or company, the ability to correctly evaluate liquidity indicators, which are increasingly dependent on business activity and OS use.
Since they participate in the formation of a significant share of liquid assets, the effective value of fixed assets should ensure the stable operation of the enterprise. Moreover, the criteria for this effectiveness are indicators of the minimum time period of circulation and its speed. During this period, the conversion of working capital into real cash should occur.
The need for investment is directly proportional to the value of the turnover rate. Therefore, the lower the rate of turnover, the higher the need for the enterprise or organization to attract borrowed resources. And this, in turn, significantly reduces the stability of the enterprise in an unstable market and its attractiveness to external investors.
Effective OS management is achieved when the analysis of working capital turnover shows that their values are at the level of 58-75% of the total assets.
In addition, since operating systems are primarily intended for servicing and ensuring the continuity of current production, the analysis of working capital turnover makes it possible to quickly restructure the entire operating system in order to give it a more perfect configuration that meets modern financial management requirements.
In a word, the role and importance of professional OS analysis is becoming a necessary tool for managerial strategy and a way to respond quickly to changes in a dynamically changing market environment.