# Advice 1: 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. Instruction
1
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.
2
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.
3
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.
4
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.

# Advice 2 : How to find working capital

Own working capital is part of current assets formed at the expense of own capital. Working capital needed to Finance current activities of the organization. In their absence, or shortage the company has to apply for the borrowed funds. Instruction
1
To find the value of own circulating assets of the enterprise, you should know the amount of sources of own funds non-current assets. Working capital will be calculated as the difference between these values:
SOS = SK – VA where: SOS working capital; SK – own capital of the enterprise;VA – non-current assets.
2
Sometimes to equity equate the amount of long-term liabilities (long term borrowings). In this case, working capital will be calculated as follows:
SOS = SK + TO ISLANDS, where long – term obligations of the enterprise.
3
You can find the amount of own funds another way – as the difference between the sum of current assets and current liabilities of the company: COC = OA – KO, where: OA – floating assets; CO – current liabilities of the organization.
4
Remember that the amount of working capital is one of the most important indicators of financial stability. Their absence suggests that all current assets of the organization, and sometimes part of non-current assets formed at the expense of borrowed sources.
5
The amount of working capital you can use in the calculation of the ratio of own working capital. It is defined as the ratio of the magnitude of working capital to the value of current assets. This ratio shows what proportion of current assets formed at the expense of own funds of the enterprise.
6
In this case, note that the company is financially unstable, and the structure of balance unsatisfactory, if the ratio is less than 0.1. This value is considered standard for the considered factor, but, as practice shows, this criterion satisfies a small percentage of enterprises.
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