Advice 1: How to calculate the availability of own working capital

Security own circulating funds is one of the main indicators of financial stability. If the company does not have equity, it means that the formation of current assets, and in some cases part of the non-current, at the expense of borrowed funds.
How to calculate the availability of own working capital
Instruction
1
To determine the security of the enterprise own circulating means is a special ratio. It is calculated as the ratio of own working capital to the volume of current assets. In turn, the amount of working capital is calculated as the difference between own capital (line 490 of "Balance") and the amount of non-current assets (line 190).
2
The ratio of own circulating means indicates what part of equity capital left over from the formation of non-current assets is used to cover working capital. The normative value of this ratio is 0.1, i.e. 10 percent of working capital should be formed at the expense of own capital of the enterprise.
3
There are times when the difference between equity and non-current assets of the company is negative. This means that own capital of the company is insufficient to form not only a part of circulating assets and non-current, ie a part of the core, and all current assets are formed at the expense of borrowed sources.
4
Sometimes non-current assets are covered 100 percent equity, and working capital are provided through loans. In this case, the ratio of own circulating means will be zero.
5
If the level of this ratio below the standard value, it indicates a lack of own capital of the enterprise or too large value of non-current assets, for example, due to the large volume of incomplete construction, or a significant value of current assets, e.g. due to the growth of unclaimed stocks or a large volume of accounts receivable.

Advice 2 : How to calculate the ratio of own working capital

The asset side of the balance sheet presents current and non-current assets. Current assets - funds provided for short-term use. These assets are called working capital, since they are in constant turnover, changing its shape. The main measure of working capital is the ratio of current activities own current funds. It shows what part of current assets is financed by own funds of the organization.
How to calculate the ratio of own working capital
You will need
  • analyzed the balance sheet of the enterprise (form # 1).
Instruction
1
Calculate the availability of own circulating assets (SOS) by dividing the amount of equity (section 3 of the balance "Capital and reserves") and the value of non-current assets (section 1 balance):
SOS=SC/VA.
2
Calculate the ratio of the current activities of own working capital (ber.SOS.) according to the formula:
Ber.SOS=SOS/About.With.
The normative value of the coefficient of SOS should be not less than 0.1. The increase compared with the previous period shows further development of the enterprise.
3
Calculate the coefficient of security of material stocks own current assets (ber.MZ) according to the formula:
Ber.MZ.=SOS/MZ.
This ratio shows the extent to which inventories covered by its own sources and its recommended value is not less than 0.5.
4
Calculate the coefficient of maneuverability on equity (Km.SK) according to the formula:
Km.SK=SOS/SK.
This coefficient shows, what part of own capital is used for ongoing activities, i.e., invested in current assets. The high value of this indicator positively characterizes financial condition of the enterprise. Recommended criteria of 0.5-0.6. The flexibility ratio can have a negative value if all equity capital invested in fixed assets.
5
Calculate the coefficient of manoeuvrability of own current assets (Km.SOS). This ratio characterizes the part of working capital, which is in the form of cash with the absolute liquidity.
Km.SOS.=DS/AS.
The growth of this indicator is seen as a positive trend. The value of the index established by the organization itself, and depends on how high daily need he in free cash.
Note
Condition of current assets is characterized by a number of factors: the ratio of the current activities of own working capital (ber.SOS.), the coefficient of security of material stocks own current assets (ber.MZ), the coefficient of maneuverability on equity (Km.IC), the coefficient of manoeuvrability of own current assets (Km.SOS).
Useful advice
The indicators should be calculated at the beginning and end of the year to detect changes positive or negative for the organization.
Is the advice useful?
Search