Inventories are called material resources that are in the enterprise, but have not entered into manufacturing process.
Rationing working capital in inventories begins with the determination of the average daily consumption of raw materials, basic materials and purchased semi-finished products in the planned year.
The average daily consumption of raw materials, basic materials, purchased products and semi-finished products is calculated by groups, and in each group their most important types are distinguished, which make up approximately 80% of the total cost of material assets of this group. Unrecorded types of raw materials, basic materials, purchased products and semi-finished products are classified as expenses for other needs. Average daily consumption material resources P is the quotient of dividing the sum of all planned annual costs of raw materials, basic materials, purchased products and semi-finished products by the number of working days in a year (360). The standard of industrial stocks consists of the current, insurance, technological, transport stock.
The current stock (TK) is intended to provide production with material assets between two reporting deliveries:
where J is the delivery interval, days.
This is a constant supply of materials, fully prepared for production.
This stock is the maximum. The current stock reaches its maximum value at the time of the next delivery. With use, it decreases and is completely consumed by the time of the next delivery.
In the process of calculating current stocks, the most time-consuming is the establishment of a delivery interval, i.e. interval between two successive deliveries. In case of untimely receipt of goods, i.e. when the actual interval (J) exceeds the planned interval (J), a situation may arise to stop production due to the lack of the necessary material. To avoid stopping the production process, a safety stock is created.
Safety stock (SZ) is defined as half the product of the average daily material consumption (P) and the gap in the supply interval (J-JPL),
SZ \u003d P * (J-J) * 0.5
negotiable means of rationing
With an aggregated estimate, it can be taken in the amount of 50% of the current stock. In case when industrial enterprise located far from transport routes or non-standard, unique materials are used, the safety stock rate can be increased up to 100%. When supplying materials under direct contracts, the safety stock is reduced to 30%.
The occurrence of safety stock is due to a violation in the supply of material on the part of the supplier. If the violation is related to transport organization, a transport stock (TrZ) is created, including those working capital that are diverted from the day the supplier's invoice is paid until the cargo arrives at the warehouse. The transport stock is calculated in the same way as the safety stock:
ТрЗ= Р*(J-J)*0.5
The most time-consuming process is the determination of the interval for the supply of insurance and transport stock, which are subject to the influence of both permanent and temporary factors. Therefore, when calculating the norms of working capital, it is necessary to take into account the specific production and economic conditions of each industrial enterprise.
Technological (preparatory) stock is created in cases where incoming material assets do not meet the requirements technological process and undergo appropriate processing prior to being put into production. The technological stock is calculated as the product of the material manufacturability coefficient and the sum of stocks (current, insurance, transport):
The material manufacturability coefficient is set by the commission, which includes representatives of suppliers and consumers.
The preparatory stock is associated with the need for acceptance, loading, sorting and warehousing of production stocks. The time standards required for these operations are set for each operation on the average size of the supply based on technological calculations or by timing.
AT this case the preparatory stock is equal to the sum of the average time for receiving and unloading incoming material and the time for paperwork and warehousing, divided by the number of working hours (8). Technological reserve is not specified.
Stock rate:
NZ \u003d PZ + TZ + SZ + TRZ,
where NZ - stock rate;
ПЗ - preparatory stock;
TK - current stock;
SZ - safety stock;
TRZ - transport stock.
The lead time is calculated as the sum of the average time for receiving and unloading incoming material from the supplier and the average time for paperwork, quality control and warehousing for one delivery, divided by 8 hours.
Stock rate calculation
|
Material name |
Preparatory stock, days |
Current stock, days |
Safety stock, days |
Transport stock, days |
Stock rate, days |
Calculation of one-day consumption of materials in value terms:
n=total quantity of materials in physical units*normative price per unit of materials / number of working days per year.
Number of working days in a year - the number of days in a year minus weekends and public holidays (250).
Determining the daily consumption of materials:
The stock rate for each type of material is equal to the product of the total stock rate and the daily consumption of materials:
|
Reserve standard, rub. |
The total standard for the stock of materials is equal to the sum of the stock standards for certain types materials:
SNZ= 244568.305, where
SNZ - the total stock of materials.
The working capital ratio for spare parts is set on the basis of their actual consumption per 1 million rubles. the cost of all equipment by dividing the working capital ratio by the book value of the equipment.
The standard for spare parts is calculated depending on the group of equipment. The first group includes equipment for which standard norms of working capital for spare parts have been developed; the standard is defined as the product of standard norms and the amount of this equipment, taking into account reduction factors. The second group includes large, unique, including imported, equipment, the standard for which is determined by the direct counting method. The third group of equipment includes small single equipment, the standard for which is established by the lumped account method. The working capital ratio for spare parts is generally equal to the sum of the ratios for the three groups of equipment.
The working capital ratio in the stocks of low-value and wearing items is calculated for each of the items according to the stock in the warehouse and operation. For warehouse stock, the standard is determined in the same way as for raw materials, basic materials; for the operating stock, the standard is set, as a rule, at a rate of 50% of the cost of items, the other half of their value is written off to the cost of production upon transfer to operation.
The current system of normalization of working capital has a number of negative consequences and therefore needs to be improved. For example, the standard of working capital in stocks of inventory items takes into account the cost of stocks of individual materials, which does not meet real needs. In fact, the cost of a daily stock of materials and finished products is not constant and can significantly deviate from the planned value during the year. Therefore, when planning working capital on the basis of the standard, it is necessary to take into account the fact that with a significant range of materials, one part of them can be characterized by maximum reserves, and the other by minimum ones. If the maximum inventory in the process production activities increase, then the value of normalized working capital will exceed the real need, i.e. there will be excess reserves.
Note. The text of the task is taken from the forum.
Determine the norms of working capital by elements and the general norm based on the following data:
| Name of indicator | Indicator value |
| Production program, details | 500 |
| Cost of one part, UAH | 107 145 |
| Duration production cycle(costs increase evenly), days | 38 |
| The amount of costs for basic materials as part of the cost of the part, UAH. | 71 430 |
| Standard stock of basic materials, days | 19 |
| Consumption of auxiliary materials for the annual output, UAH | 4 285 800 |
| Auxiliary materials stock rate, days | 36 |
| Fuel consumption, UAH | 2 285 760 |
| Fuel supply rate, days | 27 |
| Norm of other inventories, UAH. | 642 870 |
| Finished goods stock rate, days | 5 |
Comment.
That's interesting, does the author of the problem know that the production program can be daily, shift, weekly, monthly, quarterly and annual, as well as for any period of time that we can think of? From which it follows that the loading of production (as well as the standard of working capital) will differ significantly! And how to solve it? I would venture to suggest that the production program was given to us in a year. (I came to this conclusion by comparing the reserve standards that are given for the year, and the annual program turned out to be close in meaning)
There is also one more nuance - is the standard given in working days or in calendar days? Accordingly, the solution will be different. For simplicity, we choose calendar days and consider that the company works in one shift. We have 365 days in a year.
It is completely incomprehensible what is hidden behind the words "the cost of one part." Is this a direct cost? Full cost? Production cost? For the purposes of the solution, let's assume that the average actual production cost accounted for on account 26 "Finished products" is meant.
Another remark. It will still not be possible to determine the general standard of working capital from the data of the task, since there is no data on the safety stock, the standard of loading and unloading operations, etc. But for the sacred purpose of "solving the problem" we will ignore all this... I wonder how many businesses will lose their money being run by "specialists" who are trained on such problems?
Solution.
Let's define the daily (daily) production program.
500 / 365 = 1.36986 parts per day
Then:
Standard stock of basic materials
19 * 1.36986 * 71,430 = UAH 1,859,132.90
Auxiliary material stock standard
4 285 800 / 365 * 36 = 422 709.04 hryvnia
Fuel reserve standard
2 285 760 / 365 * 27 = UAH 169 083.62
Finished goods inventory standard
5 * 107,145 * 1.36986 = UAH 733,868.25
Work Inventory Ratio
(107 145 - 71 430) * 1,36986 * 38 / 2 = 929 566,45
Summing up the obtained values, we determine a certain "general standard" that is required to solve the problem. Please take into account that the actual working capital ratio will differ from the value obtained.
1,859,132.90 + 422,709.04 + 169,083.62 + 733,868.25 + 929,566.45 = UAH 4,114,360.26
Answer: UAH 4,114,360.26
Task 2. Calculate the working capital ratio
During the year, 1000 products will be manufactured, the cost of one product is 183 UAH. The duration of the manufacturing cycle is 9 days, at the beginning of the cycle 405 UAH is spent. Determine the standard of working capital in work in progress.
Solution.
Knz - the coefficient of increase in costs in work in progress.
Knz \u003d (Snach + 0.5 * C) / (Snach + C)
Working capital ratio- is the minimum required amount Money providing economic activity organizations, enterprises. The organization's working capital ratio is set for:
- core business,
- capital repairs carried out on their own,
- housing and communal services,
- auxiliary, auxiliary and other farms that are not on an independent balance sheet.
How to determine the working capital ratio
The working capital ratio is determined by summing up the product of one-day consumption of material assets, production output and the stock rate in days for the corresponding types of working capital.
The one-day consumption of material assets or the output of products at enterprises with a uniformly increasing volume of production throughout the year is calculated according to the cost estimate of the 4th quarter. planned year, since the volume of production costs, as a rule, is the largest in this quarter.
At enterprises with a seasonal nature of production, one-day consumption is calculated according to the cost estimate of the quarter with a minimum volume of production, since the need for working capital in excess of the minimum is covered by borrowed funds. It is determined by dividing the amount for the corresponding article of the quarterly cost estimate by 90 days.
Was the page helpful?
More found about working capital ratio
- Monitoring and analysis of working capital based on the accounting (financial) statements of commercial enterprises These include the acquisition of working capital should be carried out primarily at the expense of own funds the share of own funds in current assets should exceed borrowed funds the amount of working capital should exceed short-term liabilities the amount of working capital be within the established standards both in general and for certain types of working capital funds must work, i.e. constantly be in circulation, but the balance of funds and their equivalents must ensure constant solvency inventories must ensure constant and uniform performance production program and the sale of products, each enterprise must have scientifically based standards of working capital in general, as well as by their types of inventories of receivables and
- Methods of regression analysis in planning and forecasting the need for working capital As for normalized working capital, in order to determine their planned value, a certain calculation and analytical base has been developed in accordance with which working capital standards can be calculated as follows. standard of working capital in raw materials and materials N SM N R V C t Z
- Rationing of own working capital as the most important tool for ensuring the financial stability of agricultural enterprises The need to use the method of rationing own working capital in our opinion lies in several aspects, first market economy the standard of working capital acts as the basis for the allocation of part of the profit directed to the formation of own working capital; secondly
- The working capital ratio is the minimum required amount of cash advanced into working capital. production assets as well as to circulation funds that ensure normal activity. The standard of working capital in stocks of raw materials of basic materials and purchased semi-finished products
- Topical issues and modern experience in analyzing the financial condition of organizations - part 4 The fulfillment of the fourth inequality indicates that one of the conditions is met financial stability the company has working capital When one or more inequalities do not meet the standard and have the opposite sign
- Planning stocks of finished products of a machine-building enterprise With the coefficient method, the standard of working capital for the planning period is set using the standard of the previous period and taking into account
- Analysis of financial statements. Practical analysis based on accounting (financial) statements Availability of own and equivalent working capital 14067 16274 18965 23216 26039 185.1 4 Own working capital ratio 21497 25573 31332 34402 43019 200.1
- The balance of the solvency of the enterprise and the liquidity of its financial resources The coefficient of loss of solvency norm is more than 1 9 where Ax - the most liquid assets - cash and short-term ... The reasons for this may be insufficient provision of financial resources failure to fulfill the plan for the sale of products irrational structure of working capital untimely receipt of payments from contracts other Taking into account the fact that when describing solvency
- Analysis of the state and use of borrowed (borrowed) capital based on the accounting (financial) statements of OJSC Vympel; the attracted funds in working capital exceed the established standard and tend to grow, which also increases the dependence of the financial condition
- Security of enterprises with own working capital and lending risks With such significant negative values of the ratio of own working capital, it is still possible to speak about the value of the security standard only in theoretical terms.
- Estimation of economic risk based on financial ratios Compliance with the standard 1 0 Working capital ratio of current assets SK-IA OBA >0.1 0.362 1
- Peculiarities of applying methods of comparative economic analysis in assessing the financial condition of an organization Working capital ratio Coss ≥0.5 0.86 -4.18 0.42 0.43 0.13 0.23 0.49
- How to establish financial management in a crisis This standard is also set for a month The remaining funds replenish the profit and depreciation fund and are spent on ... However, for the effective management of working capital, the company's special funds are clearly not enough.
- Analytical indicators of financing the organization's current assets The coefficient of provision with own working capital of current assets KOSS OA SOS OA Characterizes the share of own sources of financing in the total value ... OS OA Characterizes the share of own sources of financing in the total value of current assets normative value > 0.1 Coefficient of financing current assets due to long-term liabilities K
- The need of an enterprise for working capital
- Analysis of cash flows as a tool for assessing the availability of cash in an enterprise on the example of OAO Nizhnekamskneftekhim Cash reinvestment ratio< Кр >0.1 The values of the above indicators in relation to OAO Nizhnekamskneftekhim are presented... Indicator Standard Year 2010 2011 2012 Cash efficiency ratio R % - 159.20 971.20
- The development of a methodology for assessing the financial stability of organizations in the manufacturing industry CMEA indicates the flexibility of using own working capital in the specialized literature, they are sometimes also called functioning or working capital for financing
- How to assess the financial stability of an enterprise? Financial stability standards for enterprises in the construction industry and agriculture
- The use of operational analysis in managing the financial results of a trucking company financial independence see table 3 table 3.
- Methods for estimating the value of a company in M&A transactions using the example of the takeover of Kalina CONCERN OJSC Kalina, the following conclusions were drawn; own working capital differs significantly from zero in positive side which indicates the inefficient use of resources, the autonomy coefficient slightly exceeds the standard, which indicates the company's tendency to reduce efficiency, the permanent asset index shows a decrease in the company's activity in using its own funds to finance outside current assets there is a tendency to increase the share of long-term liabilities liquidity ratios are
Ensuring a normal production process consists not only in timely technical preparation of production, but also in timely financial support of both preparatory and production processes themselves.
It must be understood that for the production of any product, it is necessary to both purchase materials, components and pay wages, but also ensuring the operation of the enterprise throughout the entire time until raw materials, materials and components become finished products. That is, if an enterprise needs 10 days to produce 1 product, while 2 products are produced per day, then every day 20 units of products are in production in varying degrees of readiness. As a result, the costs of their production will be constantly "frozen" in work in progress.
One of the tasks financial director is a timely assessment of changes in the volume of work in progress with an increase or decrease in the volume of output and the formation of the necessary financial resources for the smooth functioning of the enterprise. This means that during the formation of each financial plan it is necessary to provide for a change in the volume of working capital in the form work in progress.
For a rough estimate of the amount of working capital required to support work in progress, you can use the formula below.
WIP formula
Symbols in formulas:
WIP- standard of work in progress
N average daily- the volume of the average daily output in monetary terms
t- duration of the production cycle
k- cost escalation factor
N years- the volume of annual output in monetary terms
Workday- number of working days per year calendar plan enterprise work
So- initial costs for launching the product into production
sp- full production cost of the product
Explanation.
The volume of work in progress is equal to the average daily cost of output, multiplied by the duration of the production cycle and by the coefficient of increase in costs. (Formula 1)
Each of the factors below will be considered separately, and the disadvantages of this formula will also be indicated.
Average daily output
The average daily output is found as a ratio of the annual output to the number of working days during which the enterprise operates (Formula 2). At the same time, the number of working days depends on the individual mode of operation of this particular enterprise.
Let's assume that there are two enterprises, with an output of one million dollars a month. At the same time, one works seven days a week, and the second - five. As a result, in April, the first average daily output will be equal to
1,000,000 / 30 = $33,333
and the second
1,000,000 / 21 = $47,619.
As you can see, the mode of operation of the enterprise radically affects the estimated average daily output.
The main "pitfall" of this method of calculation lies in the very assumption that the company produces products rhythmically and evenly. For all my many years of financial management practice large enterprises, this has never happened (!). What follows from this? It's very simple - at the time of the need for peak production, working capital is simply not enough and you stop production! It's like a joke about the "average temperature in the hospital" - some patients in the morgue, and some with +42.
When planning the required volume of financial resources, it is necessary to take into account precisely the "peak" periods of production and accumulate in time financial resources. Teachers, on the other hand, often do not explain these nuances to students and focus their attention on solving problems that distort the real state of affairs and have little to do with reality.
Cost escalation factor
Cost escalation formula shown in the figure above (Formula 3). Let us first consider the economic meaning of calculating this coefficient.
The accumulation of production costs does not start at all from a "zero mark". No one will start the production process, at least without first acquiring raw materials, materials or components that are subject to further processing. That is why many authors erroneously designate the amount of material costs as initially accumulated costs. In fact, materials are involved in the production of a product gradually, as it is produced (assembled), and the initially accumulated costs may include, for example, design documentation if we are dealing with individual production.
At the moment when production is completed and the semi-finished product has become a finished product, all costs that are subject to accumulation are collected as the production cost of the product (the top point of the graph).
If we return to the WIP calculation formula (Formula 1), then to calculate the cash equivalent of the cost of work in progress, it is assumed that the costs of production increase evenly, so if we find the average cost of a product in work in progress, we can calculate the entire volume of work in progress.
Since we have reduced the problem to finding the average value on the cost escalation graph, we can now explain Formula 3 ( cost escalation factor). To the initial accumulated costs at the time of production of the product, we add exactly half of the difference between the full and initial cost of the product. Thus, we find ourselves exactly at the point indicated on the graph. By dividing the resulting value by the total production cost of the product, we obtain the desired coefficient in relation to the cost for calculation using Formula 1.
1. Rationing of working capital
Task 1.
The consumption of materials at the enterprise for the quarter is 360 thousand rubles. The material stock norm is 25 days. Determine the standard stock of materials for the quarter.
Solution
Thousand rub.
Task 2.
Determine the norm of working capital for inventory and tools in operation, if the norm of working capital per person is 200 rubles, the number of workers at the enterprise is 700 people. Writing off working capital for expenses is made in the amount of 50% when the funds are put into operation and 50% after the end of their service life. Service life take 2 years.
Solution
thousand roubles.
Solution
2000 0.27 \u003d 540 thousand rubles.
Task 4
To ensure the production and sale of products, a certain amount of working capital is required. The production program is 700 items per year. The cost of one product is 1500 rubles. The coefficient of increase in costs in work in progress is 0.66. The consumption of materials for one product is 1000 rubles. with a stock rate of 40 days. Finished product inventory is 5 days. The duration of the production cycle is 25 days. Determine the standard of working capital by elements: inventories of materials, work in progress and finished products, the total amount of normalized working capital.
Solution
1. Standard stock of materials:
thousand roubles.
2. Standard of work in progress:
thousand roubles.
3. Finished product standard:
thousand roubles.
4. The total amount of normalized working capital:
Thousand rub.
Task 5
Determine the standard of working capital in work in progress. Output per year - 10,000 items. The cost of the product is 800 rubles. The coefficient of increase in costs in work in progress is 0.5. the duration of the production cycle is 5 days.
Solution
thousand roubles.
Tasks for independent solution
Task 6
Calculate the value of the production stock of materials to ensure the production program of the enterprise in the amount of 4000 products per year. Supplies of materials are made once a quarter, the consumption rate of materials is 90 kg.
Task 7
To ensure the rhythmic release and sale of products, a certain amount of working capital is needed in the production stocks of material resources. The production program of the product "a" - 500 pieces, "B" - 300 pieces. Data on the consumption of materials are given in the table.