Count the amount of working capital ratio of own funds that relates to the financial stability of the company. It characterizes the amount of working capital in the company, which are necessary for its financial sustainability. Calculate this ratio using the following formula: subtract from the amount of equity capital the ratio of current assets non-current assets.
Please note that when the indicator of sufficiency of own means will be low, your chances of getting credit will be low. However, there are various ways to make changes in the structure of accounting report thus, to achieve a growth of this ratio.
Reduce the value of the ratio of current assets to increase working capital own funds. It will also help you increase the amount of own capital and to reduce the amount of non-current assets.
Use other methods to increase own funds. This can be attributed to the income of all available or a specific part of accounts payable. In this case, the amount of equity will increase. However, this method is permissible only in respect of outstanding loans, for which the period of limitation is expired.
Contract for purchase and sale of the shares with deferred payment. Such an agreement will help you reduce the amount of non-current assets and to increase the amount of working capital. If in practice it turns out that the company does not intend to alienate its own shares in favour of other persons, then the specified documentation needs to include additional terms for deferment of payment and to specify that in the case of non-payment of the amount equal to the purchase cost of these shares in a certain (specific) period of time, they will be refundable by the company to the seller.
Advice 2: How to calculate working capital
Own circulating funds of enterprises – those funds, which were invested in current assets of the company. This is the subject of labor, raw materials, finished products in warehouses of the company, as well as monetary funds. To calculate working capital you can use in several ways.
Calculated according to balance – the most simple, fast and convenient. Official estimates use a formula, spelled out in an official document - Methodological provisions for the assessment of the financial condition of the organization. This formula for calculation of working capital of the enterprise must from the sum of section III of the balance deduct the amount of section I. in order to calculate their own turnover means the company is more practical, add to the amount of own funds long-term loans and borrowings. The fact that long-term borrowed funds are used traditionally for the acquisition of fixed assets, so you may consider them in their own revolving fundsH.
Calculation using mathematical formulas much more complicated. These formulas there are several, and each of them allows you to calculate your own working funds (SOS). In order to determine SOS, subtract the amount of their sources of non-current assets. You can also calculate your own current funds on a formula taking into account long-term loans. Sum of own and long-term borrowed funds, and then subtract from the resulting value non-current assets. Finally, if using the third option, take the value of current assets and subtract from it the value of short-term debt.
Despite the fact that the exact meaning of all the mathematical expressions for the calculation of SOS differs in meaning and content, these differences are quite thin and are of greater importance in science of financial analysis, not for practical use. Therefore, all versions of calculations will give a correct estimate of the amount of working capital. Importantly, identifying the dynamics that have occurred over the last 2-3 years of activity of the enterprise, estimate the value of own circulating assets in the same way.
To assess the adequacy of working capital in the company, calculate the ratios of financial stability, which may also be considered as according to the balance sheet, and appropriate formulas.