At enterprises, an analysis of the efficiency of using fixed assets is done to study ways to expand production while minimizing financial investments in funds and factors that reduce production associated with the productivity of the process.
The basis of the production process at the enterprise are fixed assets. Accounting and analysis of the efficiency of use of fixed assets shows:
- size of funds, their technical advantages and disadvantages;
- degree, effectiveness of their use.
Depends on these data:
- volume and quality of production;
- performance activities;
- financial result of the enterprise.
The task of analyzing the state and effectiveness of the use of fixed assets:
- Assess the actual implementation of plans, the growth rate of assets.
- Examine the structure of assets.
- Identify the causes of inefficient activities of production assets.
- Identify reserves for the use of fixed assets of the organization.
An analysis of the effectiveness of the funds helps in developing an action plan to eradicate deficiencies and increase the effective operation of production assets.
Definition of fixed assets
Accounting and analysis of assets, the effectiveness of their use are necessary to identify changes in their structure. The asset structure separates them:
- by appointment;
- by service life;
- by power.
A huge role is played by the determination of the structure of funds according to their technological purpose:
- houses and buildings;
- equipment for the production process;
- car park;
- production equipment;
- other assets.
Factor analysis of the efficiency of use of fixed assets helps:
- evaluate the structure;
- identify reserves;
- identify deficiencies in the use of equipment;
- formulate the reasons for the illiterate use of funds.
Production assets take part in the production process for a long period of time. Their cost is transferred to the manufactured product.
Non-productive funds are recognized in the accounting of houses and building structures on the balance sheet. They are not used in the production process.
The production capacity of the enterprise is determined by production facilities. At large industrial enterprises, industrial funds directly related to the production process occupy a large part in the structure of funds.
Fund structure
Analysis of the movement and efficiency of use of fixed assets:
- gives the management of the organization data on the structure of funds and the relationship between their groups;
- determine the prospects and change in the structure of funds.
Comparison of indicators of different periods will allow:
- take restoration measures to organize an effective ratio of shares of equipment and machines;
- assess the magnitude of the impact of changes in indicators on the effective use of funds.
The value of fixed assets of the enterprise changes due to the receipt and disposal of fixed assets.
An analysis of the security and efficiency of the use of assets shows that the expansion of the volume of products manufactured at the enterprise is directly related to the share of modern innovative means of labor in these funds. The analysis reveals the reasons for the disposal of assets from their entire composition and certain types or objects.
When analyzing the dynamics and structure, it is necessary to consider the state of the funds from the point of view of the modern technological process, the increase in production volumes depends on it to a large extent. Due to constant innovation changes and accelerated technological progress, the coefficients of validity and depreciation, renewal and retirement are used to characterize the technical condition of the funds.
Asset Accounting
Analysis of the effectiveness of the use of funds depends on the grouping of assets:
- by function;
- by industry use;
- for participation (non-participation) in the technological process of production: active and passive;
- by appointment: production and non-production;
- by belonging of fixed assets to the organization: own or leased;
- by period of use.
All fixed assets of enterprises are divided into three groups by service life:
- houses and buildings;
- fleet of vehicles, office equipment (including furniture), machinery and equipment used in production, household appliances;
- other assets.
Depreciation
Depreciation charges are part of the value of assets carried forward to the product. To determine the depreciation, carry out mathematical calculations using information about the use of the analyzed types of funds.
The amount of depreciation is calculated on the basis of the norms established by law. It is assumed that the funds are depreciated over the entire period of work. Depreciation rates:
- differentiate according to the period of use;
- expressed as a percentage;
- reviewed on an ongoing basis.
The organization, at its discretion, selects a method for calculating depreciation of fixed assets from those proposed by law and review it an unlimited number of times:
- straightforward;
- decrease in residual value;
- accelerated reduction in the final price;
- cumulative;
- industrial.
The depreciation accrual according to the new method starts from the month following the period of the decision to change the depreciation charge. Depreciation is calculated on a monthly basis by accounting staff.
For financial planning, updating fixed assets, analysts need data on their technical good condition, characterized by wear and tear coefficients.
Depreciation of funds
Analysis of the effectiveness of the use of fixed assets and their condition is also in the calculation of the coefficients of their wear and tear.
The analysis of indicators over several time periods shows the main directions of equipment wear. Financial analysts take into account that the ratios:
- retirements and updates are calculated for the reporting period;
- Shelf life and depreciation of assets are calculated at the beginning and end of the reporting date.
Depreciation is physical and moral.
The loss of technical qualities by tools due to their use in activities and in the absence of activity under the influence of natural forces is considered physical deterioration. It can be calculated:
- according to the data sheets of the equipment about the programmed duration of the operational period,
- on the actual figures of the inspection of the status of funds.
Physical wear is offset by repairs, but only partially. In practice, accrued depreciation characterizes the amount of depreciation.
Impairment of facilities due to the emergence of new types of equipment to the complete physical deterioration of previous models and types is called obsolescence. Types of obsolescence exist as follows:
- depreciation of equipment due to the cheapening of its acquisition;
- due to the production of new machines.
The depreciation coefficient characterizes the part of the value of funds written off to production costs in previous time periods. The share that will not be taken into account in the manufactured product value is determined by the expiration rate.
Depreciation of funds and its coefficient of analytics are calculated at the beginning and end of the reporting period, and trends in its changes are studied. The first section of the asset of the balance sheet of the enterprise provides data for the analysis of depreciation of equipment. A lower depreciation rate and a higher shelf life indicator indicates a good condition of fixed assets.
Why analyze?
Analysis of the effectiveness of the use of fixed assets allows us to evaluate how efficiently the equipment works and what is the magnitude of the security of the working process with the required equipment.
This analysis is an integral part of financial accounting and answers the questions:
- on the impact of the state of funds on the performance of the activity, the dynamics of the enterprise;
- the degree of utilization of production equipment;
- the need for ongoing repairs of funds;
- on the economic feasibility of investments in production;
- about further ways of using fixed assets.
Analysis and assessment of the effectiveness of the use of assets determines:
- the security of the organization and its lines of business individually with major assets;
- compliance with the size, composition and level of technical development of the means of labor to the production program of the enterprise;
- the level of work of the main assets and factors influencing it;
- balance of the existing production equipment fleet;
- the efficiency of working activities of fixed assets in time and power;
- the impact of the use of assets on the volume of products manufactured by the enterprise;
- trends in increasing the effectiveness of the use of funds.
Documents for analysis
The methodology for the analysis of the efficiency of use of fixed assets is based on data from the following documents:
- Balance sheet.
- Report on form 11.
- Inventory cards.
- Acts of acceptance and transfer of funds after repair, reconstruction or major modernization of fixed assets, transfer invoices.
Asset Use Indicators
The performance indicators of fixed assets of the enterprise:
- The load factor of the equipment reflects the efficiency of the load of equipment in time and volume. The coefficient is used to calculate the capacity of production activities for the effective operation of all equipment. There are coefficients of extensiveness (K extensive loading ) and intensity (K intensive loading ) loading industrial equipment in the enterprise. For their calculation, the formulas are used:
K intensive load = In the average actual output / P power of the equipment ,
where K intensive loading - coefficient of loading intensity;
In the average actual output - the average output per one machine hour;
P equipment capacity - the design capacity of the equipment for one machine hour.
To extensive loading = In actual work / FRO planned ,
where K extensive loading - the coefficient of the extensiveness of the load;
In actual work - the activity of equipment, calculated in hours;
FRO planned - fund planned work of equipment, measured in hours.
The product of the load factors forms an integral coefficient (K integral ):
K integral = K extensive download × K intensive download
- Total profitability (OR) is calculated by the calculation formula:
RR = 100% × Profit / (SOPF average annual + SOBS average annual ),
where: Profit - retained earnings;
SOPF average annual - the value of fixed assets;
SOBS average annual - the value of working capital.
When calculating the overall profitability of production, there is a component directly proportional to the decrease in profitability with an increase in the average annual cost of equipment and the invariance of the income received.
The profitability indicator shows analysts how efficiently fixed assets are used.
Performance measurement
The analysis of performance indicators for the use of fixed assets clearly demonstrates the relationship between the earned profit and the value of the funds used to achieve this financial result. Performance indicators demonstrate the ratio of the value of productivity growth and the cost of equipment used in the process.
To analyze the efficiency of using fixed assets, three indicators are used:
- Capital ratio.
- Capital intensity.
- Return on assets.
Return on assets is calculated:
- organization revenue per ruble of funds;
- the amount of profit per ruble of the assets of the enterprise.
In parallel with the capital productivity of fixed assets, financial analysts analyze another fundamental coefficient characterizing technological progress, the ratio of capital to labor ratio. The indicator is calculated by dividing the average annual asset value by the average number of key employees of the enterprise.
The third declared indicator, capital intensity is considered as the inverse of the return on assets. It determines the value of production assets per ruble of the enterprise’s products and demonstrates how much money needs to be spent on production assets in order to fulfill a given volume of production.
Financial analysts draw conclusions based on the calculated data of these three indicators. The main conclusion is the following: if the working activity of fixed assets increases, then the return on assets should increase, and the capital intensity should fall.
The use of fixed assets is reflected in the indicator of labor productivity. The size of the plan and the rate of productivity growth are in direct proportion to the level and rate of change in the capital productivity ratio for total income and capital ratio.
The conclusion is as follows: ensuring faster growth of capital productivity in comparison with the growth of capital-labor ratio. An analysis of the state and effectiveness of the use of fixed assets demonstrates the interconnection of the indicators of their use, as well as the direct impact on the productivity of these indicators.
Return on assets may be caused by:
- features of the specific activities of the organization,
- deficiencies in the operation and use of assets.
The reasons for the illiterate operation of fixed assets may be:
- unused funds;
- the presence of unidentified funds;
- the use of a non-modern park;
- putting into use inefficient or very expensive equipment;
- understaffing;
- insufficient qualifications of production workers.
When analyzing the capital-labor ratio, it is necessary to take into account that the most effective is such an increase in the indicator, ensured by saving staff, and not by a rapid increase in the value of production assets.
Analysis of the effectiveness of the use of fixed assets of the enterprise in dynamics over a longer period of time determines the prospects for a decrease or increase in indicators. The analysis reveals the main factors that influenced the results.
Performance indicators, their calculation
Let us analyze the effectiveness of the use of fixed assets on the example of calculating the capital productivity ratios and capital ratio:
- The capital productivity ratio (K capital productivity ) indicates the size of the products produced per ruble spent on equipment. The indicator indicates the effectiveness of the use of funds.
To calculate the coefficient, the formula is used:
K return on assets = V released products / SOS average annual ,
where, V of output - the volume of output for the year,
SOS average annual - the cost (average annual) of fixed assets.
To obtain the instantaneous value, the residual value of the funds is taken in the denominator. The objectives of the analysis determine the numerator where the volume of products sold can be used if previously released equipment is stored in a warehouse.
When calculating the return on assets, all funds are taken, with the exception of temporarily unused or leased, that is, not used in the technological process. For the calculation, the initial value of the funds or the replacement is used. When analyzing the development indicator over a long time period, the numerator should take into account the coefficient of price changes and shifts in the structural assortment of the released product, and the denominator should be used for the revaluation coefficient of assets.
- The capital intensity ratio (K capital intensity ) will indicate how much money has been spent on fixed assets for the production of one ruble. This ratio is considered as the inverse of the capital productivity ratio and is determined by the formula:
To capital intensity = 1 / To capital productivity .
The capital intensity ratio extensively demonstrates the need for equipment and other funds. It is noted how much money needs to be spent on industrial equipment in order to obtain the required volume of manufactured products. The coefficient is determined by the calculation formula:
To capital intensity = SOS average annual / V output ,
where, V of output - the volume of output for the year,
SOS average annual - the cost (average annual) of fixed assets.
The more efficiently the funds are used, the higher the return on assets and the lower the capital intensity.
- The ratio of capital to labor ratio (To capital ratio ) will clearly indicate how the employees of the enterprise are provided with the equipment necessary for labor equipment. To calculate the indicator, the formula is applied:
To the capital-labor ratio = SOS average / Czech Republic average
where, the Czech Republic is average - the average staff of production workers.
The relationship between the capital-labor ratio and capital productivity ratio is demonstrated through the calculation of labor productivity coefficient (K labor productivity ), calculated by the formula:
= V / .
= / .
, .
- : .
:
= / ,
where MO - the power used in the production of equipment;
By mehanovooruzhennosti = CPM average / Czech Republic 's average ,
where the average annual CPM is the average annual cost of working equipment.
conclusions
To analyze the efficiency of using fixed and circulating assets, indicators of workload and efficient use of equipment, its wear and tear, and equipping production workers with labor tools are taken. The calculation of these indicators is indispensable in the financial planning of production activities of any organization.
Analysis and assessment of the effectiveness of the use of fixed assets helps to make the right management decisions for a short and long time period.