ANALYSIS OF THE BUSINESS ACTIVITY OF THE ENTERPRISE
4.1 Essence, content and need for analysis business activity enterprises
To make effective management decisions and assess the impact on the economic environment in which the enterprise operates, it is necessary to constantly search for optimal relationships between a set of economic resources and the amount of economic goods produced using these resources. The efficiency of resource use and the stability of the financial condition of an enterprise largely depend on its business activity.
The term " business activity“began to be used in domestic accounting and analytical literature relatively recently in connection with the introduction of widely known methods for analyzing financial statements in various countries around the world using a system of analytical coefficients. In a broad sense, business activity means the entire range of efforts aimed at promoting a company in the product, labor, and capital markets. In the context of financial analysis, this term is understood in a narrower sense - as determining the results of an enterprise’s activities through a comprehensive assessment of the efficiency of using production and financial resources that have a direct impact on the financial result of operations.
Business activity is manifested in the dynamic development of the enterprise, the achievement of set goals, which reflect natural and cost indicators that characterize the effectiveness of using the economic potential of the enterprise and developing sales markets.
The business activity of an enterprise can be characterized using quantitative and qualitative criteria.
Qualitative criteria include: breadth of sales markets (domestic and external), enterprise reputation, competitiveness, presence of stable suppliers and consumers. An assessment of business activity at a qualitative level can be obtained by comparing the activities of a given company with the activities of related companies in the area of investment of capital. Such qualitative criteria are: the breadth of markets for products, the availability of products exported, the reputation of the organization, the stability of relationships with customers. These informal indicators must be compared with the indicators of other enterprises similar in the field of capital investment.
Using quantitative criteria, it is possible to characterize the effectiveness of using the economic potential of an enterprise in two areas:
The degree of fulfillment of the plan (established by a higher organization or independently) in terms of key indicators and ensuring the specified rates of their growth;
The level of efficiency in the use of enterprise resources. The main indicators of the business activity of an enterprise are revenue from sales of products (works, services) and profit. A situation is considered rational when the rate of change in gross profit is higher than the rate of change in revenue volumes, and the rate of revenue growth is higher than the growth rate of fixed capital (Figure 4.1).
Figure 4.1 – Dynamics of main indicators
Graphic interpretation of the dynamics of the analyzed indicators, shown in Figure 4.1, means:
1) the economic potential of the enterprise increases;
2) the volume of product sales is growing faster than the economic potential;
3) profits are growing at an even faster pace, which indicates a relative reduction in costs in the production and circulation of goods.
Deviations are possible from this ideal dependence, which should not always be assessed as negative. In particular, the reconstruction or modernization of an enterprise always involves the diversion of significant financial resources for a certain period of time. During this time, the rate of change in fixed capital may be higher than the rate of growth in output.
The main goal analysis of business activity of an enterprise is to assess the efficiency of asset management and identify potential opportunities for its improvement.
Achieving the goal is determined by solving the following key tasks:
Analysis of the dynamics of the main indicators of the enterprise’s activity in comparison with industry indicators of the level of business activity;
Analysis of the business environment of the enterprise in order to identify the main factors influencing changes in the levels of business activity of a business entity during the period under study;
Assessment of reserves for increasing business activity and development of optimal measures for their use;
Analysis of the growth rates of the main performance indicators, finding out the reasons for their deviation from the ideal model of dependencies that exist between them;
Assessment of the efficiency of use of production and financial resources;
Analysis of receivables and payables of the enterprise;
Analysis of technical, and technological features production process in order to identify reserves for accelerating turnover;
Turnover assessment working capital;
Calculation and analysis of forecast financial indicators of the enterprise, as well as the development of recommendations for eliminating factors that adversely affect business activity indicators.
Based on specific situation existing in the enterprise, some of the presented tasks can be detailed and divided into sub-items in accordance with the priorities determined by the financial analyst.
The subject of business activity analysis is a set of production processes, product sales and actions of financial managers aimed at increasing the efficiency of using working capital.
When analyzing the business activity of an enterprise, it is necessary to proceed from the fact that various entities directly related to a particular enterprise may have different approaches to solving these issues. In particular:
Lenders are primarily interested in the completeness and timeliness of receipt of interest and principal, and the state of liquidity;
The administration and staff are interested in increasing the level of wages, social benefits, and increasing the efficiency of business activities;
Suppliers are interested in price, mode and other terms of delivery, solvency;
Buyers are interested in low prices and high quality products, in a preferential mode of payment for goods;
Tax authorities are interested in the financial condition and level of management in terms of compliance with tax legislation.
The current valuation of a business is determined by what assets the company manages and what the volume and maturity of the company's liabilities are. Therefore, in the process of analyzing the business activity of an enterprise, it is necessary to assess the effectiveness of managing the assets of the enterprise. Based on the balance sheet of an enterprise, one can judge the nature of the assets used by the company. By examining a company-specific balance sheet, an analyst can determine the size and nature of the assets listed by looking at their relative proportions and making judgments about whether the company's asset base is viable. The large amount of accumulated depreciation in relation to existing real estate, plant and equipment suggests that the company has old equipment that requires updating. If large amounts of cash appear on the balance sheet, it can be assumed that there is excess money that could be put to better use. Likewise, a large jump in cash holdings may indicate underinvestment and accumulation of excess cash. A too sharp jump in the size of working capital will signal problems in the management of material working capital or receivables from customers to the company.
More broadly, general conclusions about trends in resource use can be made using just a few analytical indicators. Thus, turnover indicators show what level of capital is required to maintain the existing volume of commercial activity.
One of the qualitative characteristics of an enterprise's financial policy is the rate of turnover of the enterprise's assets. The higher the asset turnover rate, the more efficiently the enterprise operates. An absolute or relative increase in assets may indicate not only an expansion of production or the effect of inflation factors, but also a slowdown in their turnover, which causes an increase in their volume. Depending on the turnover rate, to ensure the normal implementation of business activities, it is necessary different size individual species assets. Therefore, the analysis of business activity should primarily be focused on studying the turnover and use of assets.
When analyzing business activity, the main sources of information are financial statements and data from accounting, management accounting, technical and technological characteristics production process. Great value also has information about the history of the enterprise’s work with debtors and creditors (suppliers of raw materials and customers finished products).
4.2 Analysis of the turnover of assets and capital of the enterprise
4.2.1 Asset turnover analysis
The efficiency of resource use is determined by their turnover.
Economic value of turnover:
1) the amount of assets required by the enterprise to carry out the process of production and marketing of products (goods, works and services) depends on it;
2) acceleration of capital turnover contributes to a reduction in the need for working capital (absolute release), an increase in production volumes (relative release) and an increase in profits. As a result, the financial condition of the enterprise improves and solvency strengthens.
The duration of funds in circulation is influenced by factors of an external (internal) nature.
External factors – this is the field of activity of the enterprise, industry affiliation, the scale of the enterprise, the economic situation in the country and the associated operating conditions of the enterprise.
Internal factors – pricing policy enterprises, asset structure, inventory valuation methodology.
The main factors influencing the size and speed of turnover of an enterprise’s working capital are:
Scale of activity of the enterprise (small business, medium, large);
The nature of the business or activity, i.e. the industry sector of the enterprise (trade, industry, construction);
Duration of the production cycle (quantity and duration technological operations for the production of products, provision of services, works);
Quantity and variety of resource types consumed;
Geography of product consumers and geography of suppliers;
Payment system for goods, works, services;
Customer solvency;
Quality of banking services;
Growth rates of production and sales of products;
Share of added value in the price of the product;
Accounting policy of the enterprise;
Qualification of managers;
Inflation.
The efficiency of using working capital is characterized, first of all, by its turnover. Under turnover of funds refers to the duration of passage of funds through individual stages of production and circulation.
To assess asset turnover, turnover indicators of total assets, permanent assets, and net assets are used.
The most commonly used ratio is the turnover of total assets and the turnover of net assets, or net assets. Using these indicators, you can determine how much invested assets are needed to ensure a given level of product sales, i.e., what amount of income is generated for each (one) monetary unit, for example, a ruble or dollar of invested assets. The use of net assets excludes current liabilities from calculations. This is explained by the fact that current liabilities (bills payable, taxes payable, share of long-term debt payable, accrued wages and other accrued liabilities) are primarily directly related to the company's operations and are not available to it in the course of its business. Thus, the amount of assets used by the company is effectively reduced by these ongoing current accounts payable and other current liabilities. This consideration is especially important when analyzing the activities of trading companies in which the amount of supplier invoices to be paid reaches a significant proportion of the total balance sheet.
1. Total asset turnover ratio calculated by the formula:
Where To OA– turnover of total assets, number of turnovers;
VR
A N And A K –
– average annual value of the enterprise’s assets, rub.
2. Fixed asset turnover ratio can be represented this way:
Where TO OPA– turnover of permanent assets, number of turnovers;
VR– revenue from the sale of products, goods, works, services without VAT, excise taxes and other deductions from income;
A N And A K – the value of the enterprise's total assets at the beginning and end of the analyzed period, respectively;
TA N And SO– the value of the current assets of the enterprise, respectively, at the beginning and end of the analyzed period;
– average annual value of the enterprise’s permanent assets, rub.
The turnover ratio of permanent assets shows the amount of income per unit of invested fixed assets of the enterprise.
3. Net asset turnover ratio calculated by the formula:
Where TO THE EYE – net asset turnover, number of turnovers;
VR– revenue from the sale of products, goods, works and services excluding VAT, excise taxes and other deductions from income;
A N And A K – the value of the enterprise's total assets at the beginning and end of the analyzed period, respectively;
TO N And TO K– the value of the enterprise’s current liabilities at the beginning and end of the analyzed period, respectively;
– average annual value of the enterprise’s net assets, rub.
The turnover rate of the most mobile funds
Where To OOA– turnover ratio of current assets, turnover;
VR
OA N And OA K– the value of the enterprise’s current assets at the beginning and end of the analyzed period, respectively, rub.;
– average annual value of the enterprise’s current assets, rub.
Inventory turnover can also be calculated in the number of days during which the sale or use in production occurs and then the sale of inventory items. To determine this indicator, it is necessary to divide the duration of the period (for example, 365 days a year) by the inventory turnover rate for this period:
Where T OZ– duration of one inventory turnover, days;
DP
TO OZ– inventory turnover ratio, turnover.
It should be noted that these indicators are very approximate. The distortion of the real situation may be due to the variety of activities of the enterprise, while a significant part of the production activity requires the involvement of a large number of assets (for example, the service sector or wholesale trade require relatively fewer assets to generate a certain amount of income). Therefore, in the analysis process, it is necessary to strive to separate financial indicators by main types of activities or types of products.
Special attention in the process of analyzing the use of assets, the focus is on key items of working capital: inventories and accounts receivable (accounts receivable). The main goal of the analysis is to establish signs of a decrease in the amount or, conversely, excessive accumulation of inventories and accounts receivable. Typically, these balance sheet items are compared with the amount of income from the sale of products or services or with the cost of goods sold, since these items are considered to be closely interrelated.
It is difficult to give an accurate assessment of inventory on the basis of balance sheet data alone. Typically, the average amount of inventory at the beginning and end of the reporting period is used. Sometimes it is advisable to use only the indicator at the end of the reporting period if there is rapid growth companies and inventories are constantly increasing to support rapidly growing sales volumes. It is also important to consider the method of writing off inventories to the cost of production.
The ratio of sales volume (revenue from sales) and the amount of inventory can give a general picture, but usually a more accurate indicator will be the ratio of inventory and cost of goods sold, since these indicators are comparable. The fact is that sales income includes the amount of premium (for production costs), which is not included in the cost of inventory.
4. Inventory turnover ratio calculated this way:
Where TO OZ– inventory turnover ratio, turnover;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
Z N And Z K– the cost of the enterprise’s inventories at the beginning and end of the analyzed period, respectively;
– average annual cost of inventory, rub.;
With rp– cost of sales, rub.
The first formula uses sales revenue as a base, and the second formula uses cost of sales, which is more consistent with the content of inventory. This indicator characterizes the speed with which inventories were turned over during the reporting period. The higher the inventory turnover ratio, the better: low inventory levels reduce the risk associated with the inability to sell products and indicate efficient use of capital. If a company's inventory turnover rate is significantly higher than the industry average, this may indicate a potential shortage of purchased goods and materials, which could affect the quality of customer service and ultimately weaken the company's competitive position. The analyst's final conclusion requires additional analysis.
When calculating and using the inventory turnover ratio at cost of sales in the analysis, its disadvantages should be taken into account:
1) this indicator does not take into account the fact that a manufacturing enterprise uses four forms of inventory: raw materials (materials), work in progress, finished goods and consumables. Too much to define high level reserves in any of the forms, the enterprise analyst can calculate other, more suitable coefficients;
2) in a seasonal enterprise, sales income and the cost of goods sold per month can fluctuate within very wide limits. To solve this problem, it is necessary to use in calculations the average actual cost of goods sold for the previous period or the budget (planned) cost of sales for the next period;
3) the volume and value of inventories during the year can also fluctuate widely. For example, the volume of work in progress construction company will be much greater in summer than in winter. To solve this problem, you need to calculate the total level of budget inventories for all months, and then divide the result by 12, which will show the required level of investment in inventories.
In large industrial companies, it is advisable to calculate the turnover ratio for individual types of products or a separate group of products:
1. Inventory turnover calculated by the formula:
Where To HMO– inventory turnover ratio, turnover;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
P3 n And P3 k– the cost of the enterprise’s inventories, respectively, at the beginning and end of the analyzed period, rubles;
– average annual cost of inventories, rub.
2.Turnover of finished products calculated by the formula:
Where To the UCP– turnover ratio of finished products, revolutions;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
GP n And GP to– the cost of the enterprise’s finished products, respectively, at the beginning and end of the analyzed period, rubles;
– average annual balance of finished products, rub.
3.Work in progress inventory turnover calculated by the formula:
Where To the ONP– work in progress turnover ratio, revolutions;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
NP N And NP K– the value of the enterprise’s work in progress, respectively, at the beginning and end of the analyzed period, rubles;
– average annual balance of work in progress, rub.
Most businesses must have a certain amount of cash on hand at all times—cash on hand for incidentals and cash receipts that have not yet been deposited into a bank account. As the business grows, the amount of cash on hand increases. When analyzing the business activity of an enterprise, it is advisable to determine the cash turnover as the most liquid part of the enterprise's current assets.
Cash turnover ratio calculated by the formula:
Where To UDS– cash turnover ratio, turnover;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
DS N And DS K– the value of the enterprise’s funds at the beginning and end of the analyzed period, respectively, rub.;
– average annual cost of funds of the enterprise, rub.
To analytically assess the duration of one asset turnover, a number of indicators are used.
Duration of one asset turnover each type of asset in days can be determined by dividing the duration of the analyzed period in days by the turnover ratio of the corresponding type of asset in days:
Where T OA
DP– number of days in the analyzed period;
To OA– turnover of total assets, number of turnovers.
Duration of one revolution of the most mobile means enterprise - current assets is calculated using the formula:
Where T OOA– duration of one asset turnover, in days;
DP– number of days in the analyzed period;
To OOA– turnover ratio of current assets, number of revolutions.
It should be noted that when analyzing asset turnover (both the total amount and its individual elements), an increase in the number of turnovers over a period and, consequently, a decrease in the duration of one turnover is considered a positive trend. The faster the company's assets turn over, the less is required additional funds to finance current activities. Conversely, an increase in the duration of one turnover of assets (a decrease in the speed of their turnover) leads to the need to involve additional funds in the turnover of the enterprise. The effect of accelerating or decelerating asset turnover is calculated using the formula:
Where E OA– the effect of changes in the asset turnover rate, rub.;
I is the duration of turnover of the enterprise’s current assets, respectively, in the previous and analyzed periods;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
DP– number of days in the analyzed period.
Positive value of this indicator will indicate the involvement of additional funds in circulation (negative trend of change in the indicator), and a negative one will indicate their release (positive trend of change).
When analyzing the structure and dynamics of assets, you should pay attention to the cash item. An increase in funds in bank accounts usually indicates a strengthening of the financial condition of the enterprise. The amount of money may be such that it is enough to pay off all priority payments. Having large balances of cash over a long period of time can be a result of improper use of working capital. They need to be quickly put into circulation in order to make a profit: expand your production or invest in shares of other enterprises.
An asset structure with a high share of debt and a low share of cash may indicate problems associated with the marketing policy of the enterprise, as well as the predominantly non-cash nature of settlements. Conversely, a structure with a low share of debt and a high share of cash will indicate a satisfactory state of the enterprise’s settlements with customers and other debtors.
The amount of absolute savings (attraction) of working capital can be calculated in two ways.
1. The release (attraction) of working capital from circulation is determined by the formula:
where Δ OA– the amount of savings (–) or (attraction) (+) of working capital;
– the average amount of working capital of the enterprise for the reporting and base periods;
K vr– product growth coefficient (in relative units).
2. The release (attraction) of working capital as a result of a change in the duration of turnover is determined by the formula:
where and is the duration of one turnover of working capital (in days);
– one-day sales of products.
The amount of increase in production volume due to the acceleration of working capital is determined by the method of chain substitutions:
The influence of working capital turnover on the increase in profit Δ P can be calculated using the formula:
Where P 0– profit for the base period;
I – working capital turnover ratios for the reporting and base periods.
Often, for analytical purposes, it is necessary to determine specific turnover indicators, and instead of the total amount of current assets, individual constituent elements are used. Partial turnover indicators are calculated based on specific turnover. In this capacity of a special turnover, the following indicators are used: for material inventories - the amount of their consumption for production, for work in progress - the receipt of goods at the warehouse, for finished products - shipment, for shipped products - their sale.
The absolute release (loading) of funds from circulation is the sum of the values of the two indicated factors.
The total amount of the absolute release of working capital, or their loading into circulation, can be determined from the data in the second section of the balance sheet. The difference in the total value of current assets at the beginning and end of the year (quarter, month) will show their overall change in the enterprise’s turnover for the analyzed period.
Of great importance for analyzing the use of working capital is the calculation of the relative release of working capital ( IN OTN), which is defined as the difference between the amount of working capital of the base period ( OA 0), recalculated (adjusted) according to the turnover of sales of products and services of the analyzed (reporting) period ( BP 1), and the actual value of working capital in the analyzed (reporting) period ( OA 1):
Where BP 0 And BP 1– turnover of sales of products and services, respectively, in the base and reporting periods.
The amount of relative release of working capital determines how much the actual amount of working capital ( OA 1) less (more) than their value that would be required by the enterprise in the analyzed period based on the conditions of their use in the base year (quarter, month). For these purposes, the basic amount of working capital ( OA 0) is adjusted for the rate of growth (decrease) in sales volume.
4.2.2 Analysis of receivables turnover
The main task of analyzing an enterprise's receivables is to assess the level and composition of receivables, as well as the effectiveness of the working capital invested in it. Accounts receivable analysis can be represented in five stages.
At the first stage of the analysis, the level of receivables of the enterprise and its dynamics in the previous period are assessed.
This level is assessed on the basis of determining the coefficient of diversion of working capital into accounts receivable, which is calculated using the following formula:
Where To OTV– coefficient of diversion of working capital into accounts receivable;
DZ– the total amount of the enterprise’s receivables (or the amount of debt separately for commodity and consumer loans), rub.;
OA– total amount of working capital of the enterprise, rub.
At the second stage of analysis, we determine middle period collection of receivables and the number of its turnover in the period under consideration. Accounts receivable turnover is based on a comparison of the value of this item with net sales. When analyzing this indicator, the fundamental question is whether the amount of unpaid receivables at the end of the reporting period corresponds to the amount of credit sales, which logically should remain unpaid, taking into account the terms of commercial credit provided by the company. For example, if a company sells on a condition that payment is due in 30 days, then typically the amount of accounts receivable should equal the previous month's sales. If accounts receivable on the balance sheet equal 40 or 50 days' sales, this may mean that a number of customers are having difficulty paying bills or are in default on credit, or the company has had to extend payment terms to sell its products.
An accurate analysis of the status of accounts receivable can only be done by determining the “age” of all accounts receivable on the company’s books and classifying them according to the number of days unpaid: 10 days, 20 days, 30 days, 40 days, etc. and then by comparing these periods with lending conditions for each transaction. But this kind of analysis requires access to internal information company, therefore, an external researcher is forced to be content with a rather approximate indicator comparing accounts receivable and sales volume for 1 day and then correlating this value with the average value of accounts receivable during the year. This is achieved by using the accounts receivable turnover ratio, which is calculated using the following formula:
Where TO ODZ– accounts receivable turnover ratio, turnover;
VR– revenue from sales of products, goods, works, services excluding VAT, excise taxes and other deductions from income, rub.;
D3 n And D3 k– the amount of receivables of the enterprise, respectively, at the beginning and end of the analyzed period, rubles;
– average annual value of the enterprise’s receivables, rub.
Most quick way Determining the average amount of receivables - take the amount of receivables at the beginning of the period, add to it the amount of receivables at the end of the year and divide this amount by two. Using monthly and quarterly sales information for the calculation can provide an even more accurate result. The greater the fluctuation in sales volumes, the more distorted this ratio becomes. And this will continue until it is impossible to correctly determine the average amount of receivables.
Amount of sales used in calculation given coefficient, - only the amount of sales on credit, since sales for cash clearly do not lead to the formation of receivables. Because published financial statements rarely distinguish between cash sales and credit sales, the analyst must calculate the turnover ratio on the assumption that the amount of cash sales is relatively small. If it is significant, the value of the coefficient will be somewhat distorted. Although the share of cash sales in total sales remains relatively constant, an annual comparison of the accounts receivable turnover ratio can still be very reasonable.
Although the turnover ratio characterizes the speed of collection and is very valuable for comparisons, its value cannot be directly compared with the term of the commercial loan that the enterprise usually provides. It is better to make such a comparison by expressing turnover in days.
Receivables repayment period– the number of days for which the company provides deferred payment to buyers of its products is calculated using the formula:
Where T ODZ– duration of one turnover of receivables, in days;
DP– number of days in the analyzed period;
TO ODZ– accounts receivable turnover ratio, turnover.
This ratio is often called “days receivable” or “debt repayment period.” The content of the concept of debt duration period is easy to understand: the average payment period is calculated very accurately, so violations of the period, even by several days, are easy to notice. In addition, these indicators can be easily compared with the standards that the company's management sets for the sales department, i.e. using this indicator you can monitor the effectiveness of work with clients.
Low accounts receivable turnover will indicate that the company “loves” its consumers too much, establishing long loan periods or not requiring consumers to fulfill contractual terms for debt repayment. This approach is naturally attractive to consumers of the company’s products, which undoubtedly affects the maintenance of sales volumes at a constant level or even increasing them. At the same time, low accounts receivable turnover “washes out” cash from the enterprise, forcing the financial manager to look for new sources of financing for increasing accounts receivable. It would be good if this could be ensured through the enterprise’s suppliers, who also lend to the enterprise, just as the enterprise itself lends to its consumers. But not always creditors will “love” the company as much as it “loves” its clients. And therefore you will have to resort to usually expensive bank loans.
At the third stage of the analysis, groups of receivables of the enterprise are assessed for their individual “ age groups", i.e. according to the stipulated time limits for its collection. Most often, accounts receivable are classified according to the timing of their occurrence. Its classification can be carried out by quarters, but most often grouping by days is used: 0 – 30 days; 31 – 60 days; 61 – 90 days; 91 – 120 days and more than 120 days.
At the fourth stage of the analysis, the composition of overdue receivables is examined in detail, doubtful and bad debts are distinguished. In the process of this analysis, the following indicators are used: the delinquency ratio of receivables and the average “age” of overdue (bad) receivables.
Overdue accounts receivable ratio calculated by the formula:
Where To PDZ– ratio of overdue accounts receivable;
DZ pr– the amount of receivables unpaid within the prescribed period;
DZ– the total amount of receivables of the enterprise.
Average “age” of overdue(doubtful, hopeless) accounts receivable determined by the following formula:
Where T PDZ– average “age” of overdue (doubtful, bad) receivables;
– the average balance of receivables unpaid on time (doubtful, bad) in the period under review;
– the amount of one-day sales turnover in the period under review.
One of the indicators characterizing the state of receivables is the average receivables turnover period in days (or the average period for receiving payments).
Suppose, for example, that sales on credit of OJSC Comfort looked like this: January - 31,680 rubles; February – 57,600 rubles; March – 29520 rub.
Let’s assume that by the end of March 10% of January receivables, 30% of February and 90% of March receivables remained outstanding. Therefore, as of March 31, the balance of accounts receivable amounted to 47,016 rubles. (31680 x 0.1 + 57600 x 0.3 + 26568 x 0.9 = 47016).
Credit sales in March amounted to 29,520 rubles, or 984 rubles. per day (assuming there are 30 days in a month).
Dividing the accounts receivable balance at the end of March by 984, we get 47016: 984 = 48 days, i.e., the average period for receiving payments is about 48 days.
The average period for receiving payments for two months is:
Average daily revenue = = 1452 rub.
The average period for receiving payments = 32 days.
Then the average period for receiving payments for all three months will be as follows:
Average daily revenue = = 1320 rub.
The average period for receiving payments = 36 days.
Thus, the average payment period indicator has significant shortcomings, namely:
1) the average period for receiving payments depends on the period of time taken as the basis for calculations, so it is more difficult for the manager to quickly control the payment discipline of clients;
2) the average period for receiving payments does not say anything about the distribution of accounts receivable by period.
For these reasons, it seems more informative for a financial manager to analyze distribution of receivables according to the timing of their occurrence. For example, based on the data in Table 4.1 to calculate the average payment period, you can create a schedule for the occurrence of receivables as of March 31.
Table 4.1 – Calculation of the average payment period
Table 4.2 – Structure of receivables of Comfort OJSC by timing of their occurrence
Analysis of the structure of receivables by timing of occurrence is very useful for monitoring payment discipline over time. It should be noted that the structure of accounts receivable by the timing of its occurrence cannot be built on the basis of aggregated financial reporting data; this requires more detailed information.
The structure of accounts receivable by age has one drawback - it is sensitive to seasonal fluctuations in sales. If sales volumes vary from month to month, the structure of accounts receivable will show a change in the payment discipline of customers, even if it remains the same.
To analyze accounts receivable, regardless of changes in sales volume, the so-called payment discipline approach is used. The essence of this approach is to calculate what proportion of the accounts receivable balance at the end of the month is accounted for by unpaid sales for that month, and also what shares of this balance are accounted for by unpaid sales of previous months.
Table 4.3 shows the company's actual repayment schedule for its receivables. For example, in May the volume of sales on credit amounted to 240 rubles. 20% of these sales were paid during the same month, 50% were paid before the end of the next month, another 20% - before the end of the second month following May, etc. A similar schedule was drawn up for sales occurring in the period June - november.
Table 4.3 – Debt payment percentage
Using the data in Table 4.3, we group accounts receivable, reflecting the percentage of unpaid debt for each month following the sale, into Table 4.4.
According to Table 4.4, you can evaluate the payment discipline of clients by month. For example, the collection of accounts receivable within one month from the sale date was quite stable. The greatest fluctuations in debt repayment occurred one month after the sale, and after two months the maximum overdue debt varied from 4% to 10%. In practice, certain deviations in payment discipline are quite normal. However, the financial manager needs to distinguish ordinary deviations from the average norm from the emerging trend towards a deterioration in payment discipline.
Table 4.4 – Outstanding receivables
In addition to tracking customer payment behavior, data on outstanding accounts receivable balances can be used to predict their future value.
At the fifth stage of the analysis, the amount of effect obtained from the diversion of working capital into accounts receivable is determined. For these purposes, the amount of additional profit received from an increase in the volume of product sales through the provision of a loan is compared with the amount of additional costs for obtaining a loan and debt collection, as well as direct financial losses from non-repayment of debt by buyers (bad receivables written off due to the insolvency of buyers and the end of the time limit for filing a claim). This effect is calculated using the following formula:
Where E DZ– the amount of effect obtained from the diversion of working capital into accounts receivable for settlements with customers;
– additional profit of the enterprise received from increasing the volume of product sales through the provision of a loan;
TZ DZ– current costs of the enterprise associated with organizing customer lending and debt collection;
FP DZ– the amount of direct financial losses from non-repayment of debt by buyers.
Along with the absolute amount of the effect, during this stage of analysis, a relative indicator can also be determined - the efficiency ratio of the diversion of working capital into accounts receivable. It is calculated using the following formula:
where is the efficiency coefficient of diversion of working capital into accounts receivable for settlements with customers;
E DZ– the amount of effect obtained from the diversion of working capital into accounts receivable for settlements with customers in a certain period;
– the average balance of accounts receivable for settlements with customers in the period under consideration.
The results of the analysis are used in the process of forming individual parameters of the enterprise's credit policy.
An example of assessing the impact of credit policy.
OJSC "Comfort" sells its products to customers subject to payment within 30 days. There are no discounts for early payment. Annual net sales revenue is RUB 4,699.4 thousand, and the average receivables circulation period is 8 days, since all customers pay bills on time. The average annual bad debt rate is about 3%, and receivables collection costs are 0.2% of revenue. The cost of capital of the enterprise before tax is 10%.
OJSC Comfort plans to lower the standards for providing trade credit, realizing that changes in credit policy will entail an extension of the average period of circulation of receivables and an increase in doubtful debts. With the help of weakening credit policy, the company forecasts an increase in annual revenue by 783.2 thousand rubles. New term provision of trade credit will be 50 days.
It is assumed that 80% of customers will still be paying their bills on day 40, half of the remaining customers will still be paying on day 50, and the remainder on day 60. Thus, the new receivables circulation period will be 0 x 0.8 + 50 x 0.10 + 60 x 0.10 = 43 days. The bad debt rate will increase to 6% of revenue, and the cost of collecting receivables will be 0.4% of revenue. 80% of total manufacturing costs are variable costs. It is also assumed that the enterprise has additional production capacity, and therefore investments in fixed assets will not be required, however, it is necessary to increase the average amount of inventory by 888.3 thousand rubles.
Table 4.5 provides an analysis of the impact of changes in monetary policy on the economic profit of an enterprise.
Table 4.5 – Analysis of the impact of changes in monetary policy on the economic profit of Comfort OJSC, thousand rubles.
Continuation of Table 4.5
The first column presents items or indicators of the enterprise that are associated with changes in credit policy. The second column gives the values of these items and indicators before changes in credit policy. The last column shows the values of indicators achieved as a result of changes in this policy, and the penultimate column shows the effect of changes in credit policy on these indicators.
IN in this example the easing of credit policy had a negative effect on the economic profit of the enterprise - it decreased by 157.2 thousand rubles.
4.2.3 Analysis of accounts payable turnover
Accounts payable turnover is also the object of analysis of the business activity of an enterprise. Here the analysis is complicated by the fact that accounts payable must be compared with those purchases that were made in a given reporting period. An external researcher can do this only in the case of an analysis of a trading company, the amount of purchases of which can be easily determined by adding the difference between inventories at the beginning and end of the reporting period with the amount of cost of goods sold for this reporting period.
JSC "Arsenal" (EXAMPLE)
as of 01/01/2015
Business activity is manifested in the dynamism of the organization’s development and its achievement of its goals, which is reflected in absolute cost and relative indicators.
Business activity in the financial aspect is manifested, first of all, in the speed of turnover of its funds. Analysis of business activity consists of studying the levels and dynamics of various financial ratios.
To analyze the business activity of an organization, two groups of indicators are used:
1. General turnover indicators;
2. Asset management indicators.
Assessment of absolute indicators of financial stability
| Indicator name | for 2013 | for 2014 | change |
| basis | report | ||
| 1. Total capital turnover ratio (D1) (resource productivity), turnover | 2.933 | 3.633 | 0.7 |
| 2. Duration of capital turnover (D2), days | 123 | 99 | -24 |
| 3. Mobile assets turnover ratio (D3), revolutions | 3.874 | 4.879 | 1.005 |
| 4. Duration of turnover of current assets (D4), days | 93 | 74 | -19 |
| 5. Share of current assets in total capital (D5), coefficient. | 0.757 | 0.745 | -0.012 |
| 6. Return ratio of intangible assets (D6), turnover | 1057.713 | 1498.721 | 441.008 |
| 7. Capital productivity (D7), revolutions | 19.607 | 27.412 | 7.805 |
| 8. Return on equity capital (D8), turnover | 7.233 | 6.926 | -0.307 |
The total capital turnover ratio (D1) shows the efficiency of use of property and reflects the turnover rate of the entire capital of the organization. The acceleration of the turnover of total capital occurred due to the acceleration of the turnover of mobile funds. At the same time, the duration of capital remaining in the organization’s assets decreased by 24 and amounted to 99 days.
The mobile assets turnover ratio (D3) shows the turnover rate of all the organization’s working capital (both material and monetary). The duration of mobile money turnover decreased by 19 days. Due to the acceleration of working capital turnover in the reporting year, the company additionally received profits in the amount of -14065.2 thousand rubles. The amount of working capital released from circulation as a result of accelerated turnover amounted to -433186.5 thousand rubles.
The return ratio of intangible assets (D6) shows the efficiency of using intangible assets. The turnover ratio of intangible assets increased by 441.008 and amounted to 1498.721 turnovers, i.e. the enterprise received additional income per ruble of capital invested in intangible assets.
Return on assets (D7) shows the efficiency of using only the organization’s fixed assets. Capital productivity increased by 7,805 and amounted to 27,412 revolutions, i.e. the amount of depreciation charges per ruble of sales volume decreased, and, consequently, the share of profit in the price of the product increased.
The return on equity capital ratio (D8) shows the rate of turnover of equity capital, i.e. reflects the activity of using funds. At Arsenal OJSC (EXAMPLE), this figure is less than in the same period last year - for every ruble of invested own funds there are 6,926 rubles. sales revenue.
Inventory Management Indicators
| Indicator name | for 2013 | for 2014 | change |
| basis | report | ||
| 1. Material turnover ratio (D9), revolutions | 2.93 | 3.495 | 0.565 |
| 2. Duration of turnover (shelf life) of inventories (D12), days | 123 | 103 | -20 |
| 3. Share of inventories in the total value of current assets (D15), coefficient. | 0.563 | 0.577 | 0.014 |
The material turnover ratio (D9) shows the number of turnovers of inventories and costs for the analyzed period, or the number of turnovers of the main components of inventories and costs. The cost of products sold (goods, works, services) per 1 ruble of inventory increased by 0.565 rubles. and amounted to 3.495. At the same time, a similar indicator, but in relation to the cost of raw materials and materials, has not changed, and in relation to the cost of finished products and goods for resale, has not changed. The shelf life of inventories has decreased by 20 days.
Receivables and payables management indicators
| Indicator name | for 2014 | change | |
| basis | report | ||
| 1. Funds turnover ratio in calculations (D19) | 13.758 | 21.385 | 7.627 |
| 2. Turnover period of funds in settlements (D22), days | 26 | 17 | -9 |
| 3. Accounts payable turnover (D25), turnover | 7.058 | 9.563 | 2.505 |
| 4. Period of repayment of accounts payable (D26), days | 51 | 38 | -13 |
| 5. Ratio of receivables and payables (D27), coefficient. | 0.513 | 0.447 | -0.066 |
| 6. Cash turnover ratio (D28) | 61.773 | 34.7 | -27.073 |
The turnover ratio in calculations (D19) characterizes the expansion or reduction of commercial credit provided by the organization, and the turnover period in calculations shows the average repayment period of receivables. Reducing the period for settlements with customers by -9 days. allowed the organization to release from circulation additional free cash, obtained as a result of the influx of cash due to the acceleration of the turnover of receivables by 7.627 turnover.
The accounts payable turnover ratio (D25) reflects the expansion or reduction of commercial credit provided to the organization, and the accounts payable turnover period shows the average period for the organization to repay its current obligations. An additional outflow of funds from the organization arose due to a reduction in the repayment period of accounts payable by -13 days. This indicates a reduction in the volume of financing associated with a decrease in the loan period, which changes the amount of cash outflow. However, this situation can lead to a false decrease in the solvency and liquidity of the organization.
At the same time, accounts receivable are less than accounts payable by 55.3%.
Cash turnover ratio (D28) shows the speed of cash turnover. The cash turnover rate decreased to 34.7 turnover per year
Thus, the total duration of the organization’s operating cycle in the reporting period was 120 days. Moreover, within 38 days. it was serviced by the suppliers' capital, and within 82 days. – from other sources. Such sources, as a rule, are the organization’s own funds, as well as short-term bank loans. The duration of the organization's financial cycle was 82 days.
Indicators of business activity characterize the turnover of enterprise funds. In accordance with the following indicators are used to analyze business activity:
1. Capital turnover ratio.
2. Turnover ratio of current assets.
3. Inventory turnover ratio.
4. Finished product turnover ratio.
5. Accounts receivable turnover ratio.
6. Average term receivables turnover.
7. Accounts payable turnover ratio.
8. Average turnover period of accounts payable.
9. Return on assets of non-current assets.
10. Equity turnover ratio.
Capital turnover ratio ()– this is the ratio of revenue from product sales () to the average cost of capital of the enterprise for the period (balance sheet total). Calculated using the formula
The capital turnover ratio shows how many turnovers the enterprise’s capital makes during the analyzed period, i.e. capital turnover rate. The growth of this indicator is assessed positively if it is not caused solely by rising prices.
Current assets turnover ratio ()- this is the ratio of revenue from product sales to the average cost of the enterprise’s working capital for the period. Calculated using the formula
=
,
where is the value of current assets at the beginning of the period (if the analyzed period is a year, then this is page 290 of the annual balance sheet at the beginning of the year); value of current assets at the end of the period
The turnover ratio of current assets shows how many turnovers the working capital (mobile assets) makes during the period, i.e. working capital turnover rate. The growth of this indicator is assessed positively if it is combined with an increase in inventory turnover.
Inventory turnover ratio ()– this is the ratio of revenue from sales of products to the average cost of material working capital for the period (). Calculated using the formula
= 
,
where is the cost of inventories at the beginning of the period - inventories at the beginning of the period); – the cost of tangible working capital at the end of the period (inventories at the end of the period).
The turnover ratio of material current assets shows how many turnovers material current assets (inventories) make during the analyzed period, i.e. speed of turnover of material working capital. The growth of the indicator is assessed positively. A decrease may indicate a relative increase in inventories of raw materials, work in progress, or a decrease in demand for finished products.
Finished product turnover ratio () – This is the ratio of revenue from sales of products to the average cost of finished products for the period (). Calculated using the formula
= 
,
where is the cost of finished products at the beginning of the period (at the beginning of the period); – cost of finished products at the end of the period (at the end of the period).
The finished product turnover ratio shows how many turnovers the finished product makes during the analyzed period, i.e. turnover rate of finished products. The growth of the indicator is assessed positively. An increase in the indicator means an increase in demand for the company’s products, and a decrease means a possible overstocking of finished products due to a decrease in demand.
Accounts receivable turnover ratio () is the ratio of revenue from product sales to the average amount of receivables for the period (). Calculated using the formula
; = 
where is accounts receivable at the beginning of the period; – accounts receivable at the end of the period.
The receivables turnover ratio shows how many turnovers receivables make during the analyzed period, i.e. receivables turnover rate. An increase in this ratio indicates a reduction in sales on credit, and a decrease indicates an increase in the volume of commercial credit provided to customers.
Average receivables turnover period () – average receivables repayment period in days
The decrease in this indicator is assessed positively. If the analyzed period is a year, then the numerator is 365, and if it is a quarter, then it is 90.
Accounts payable turnover ratio () is the ratio of revenue from product sales to the average amount of accounts payable for the period (). Calculated using the formula
= 
,
where is accounts payable at the beginning of the period (at the beginning of the period); – accounts payable at the end of the period (at the end of the period).
The accounts payable turnover ratio shows how many turnovers accounts payable make during the analyzed period, i.e. the rate of turnover of accounts payable. An increase in this ratio means an increase in the rate of payment of the company’s debt, and a decrease means an increase in purchases on credit.
Average turnover period of accounts payable () – average repayment period of accounts payable in days
The indicator reflects the average period for repayment of the enterprise's debts (accounts payable).
Capital productivity of non-current assets () – this is the ratio of revenue from product sales to the average value of non-current assets for the period (). Calculated using the formula
= 
,
where are non-current assets on the balance sheet at the beginning of the period (at the beginning of the period); – non-current assets on the balance sheet at the end of the period (at the end of the period).
The capital productivity of non-current assets shows how much revenue from sales falls on one ruble of non-current assets, and characterizes the efficiency of use of non-current assets.
Equity turnover ratio () is the ratio of revenue from product sales to the average value of the enterprise’s equity capital for the period (). Calculated using the formula
= 
,
where is equity capital on the balance sheet at the beginning of the period (at the beginning of the period); – equity capital according to the balance sheet at the end of the period (at the end of the period).
The indicator reflects the rate of equity capital turnover. Revenue growth, as a rule, should lead to an increase in this indicator, since it is largely provided by loans. Consequently, the share of equity capital in the total amount of sources should decrease.
An example of calculating business activity indicators is given in table. 2.25.
Analysis of the presented data allows us to conclude that the business activity of the enterprise increased in the reporting year. There is an increase in all turnover indicators, with the exception of the equity turnover ratio. The decrease in this ratio is associated with an increase in equity capital at a higher rate (121%) compared to revenue growth (117%). Thus, the increase in revenue is ensured not only by attracting borrowed funds, but also by using equity capital.
Table 2.25
Business activity indicators
| Indicators | Previous year* | Reporting year | Deviation |
| Original | |||
| Revenue from product sales, thousand rubles | |||
| Average annual cost of capital, thousand rubles | 121711,72 | 130112,7 | |
| Average annual value of current assets, thousand rubles. | 84172,8 | 91634,1 | |
| Average annual cost of material working capital (inventories), thousand rubles. | 39343,2 | ||
| Average annual cost of finished products, thousand rubles | 1909,5 | –575 | |
| Average annual amount of accounts receivable, thousand rubles. | 35043,2 | 39663,4 | |
| Average annual amount of accounts payable, thousand rubles | 41393,28 | 45364,1 | |
| Average annual value of non-current assets, thousand rubles. | 36662,12 | 38478,6 | |
| Average annual equity capital, thousand rubles. | 60389,4 | ||
| Calculated | |||
| 1. Capital turnover ratio | 1,01 | 1,10 | 0,10 |
| 2. Turnover ratio of current assets (current assets) | 1,45 | 1,56 | 0,11 |
| 3. Inventory turnover ratio | 3,11 | 3,34 | 0,23 |
| 4. Finished product turnover ratio | 64,12 | 107,31 | 43,19 |
| 5. Accounts receivable turnover ratio | 3,49 | 3,61 | 0,12 |
| 6. Average receivables turnover period, days | 104,46 | 101,06 | –3,41 |
| 7. Accounts payable turnover ratio | 2,96 | 3,16 | 0,20 |
| 8. Average turnover period of accounts payable, days | 123,39 | 115,58 | –7,81 |
| 9. Capital productivity of non-current assets, rub./r. | 3,34 | 3,72 | 0,38 |
| 10. Equity turnover ratio | 2,45 | 2,37 | –0,07 |
* – Data for the previous year are conditional
One of the areas of analysis of the effectiveness of an organization’s economic activities is the assessment of its business activity.
Business activity is manifested in the dynamic development of the company and its achievement of its goals, which is reflected in absolute and relative indicators.
Table 2.13
Calculation and assessment of indicators of business activity of the organization
|
Indicators |
Meaning |
Change |
|
|
1. Turnover coefficient, revolutions | |||
|
1.1. Current assets | |||
|
1.2 Reserves | |||
|
1.3. Accounts receivable | |||
|
1.4. Current liabilities | |||
|
1.5. Accounts payable | |||
|
1.6. Short-term loans and borrowings | |||
|
2. Turnover period, days | |||
|
2.1. Current assets | |||
|
2.2. Reserves | |||
|
2.3. Accounts receivable | |||
|
2.4. Current liabilities | |||
|
2.5. Accounts payable | |||
|
2.6. Short-term loans and borrowings | |||
|
3. Operating cycle, days (2.2 + 2.3.) | |||
|
4. Financial cycle, days (3. – 2.5.) | |||
Conclusion: In the analyzed period, the turnover of all elements of property and capital slowed down, except for accounts payable and receivable.
In 2012, the turnover of current assets slowed down by 1.19 days, inventories by 2.31 days, short-term liabilities by 4.37 days and short-term loans and borrowings by 5.78 days.
An acceleration of accounts payable turnover by 0.55 days means that creditors in the reporting period reduced the deferred payment period for obligations.
The operating cycle decreased by 11.86 days. This decrease is primarily due to an increase in the inventory turnover period by 2.31 days. Also, the size of the operating cycle was affected by a decrease in the receivables turnover period by 3.28 days. The financial cycle decreased by 11.31 days.
2.6 General conclusion on section 2
In 2012, the property of OJSC Novatek increased by 69,857,413 thousand rubles (27.94%). At the same time, the growth rate of sales revenue was 11.79%. Since the rate of revenue growth does not exceed the rate of property growth, we can conclude that the use of property owned by the enterprise is effective.
The increase in the organization's property occurred due to non-current assets, which increased by 69,379,712 thousand rubles and current assets by 477,701 thousand rubles.
The increase in current assets was mainly due to inventories and accounts receivable. The increase in non-current assets was mainly due to the growth of financial investments.
Long-term liabilities in 2012 increased by 22,808,290 thousand rubles, and short-term liabilities by 18,219,576 thousand rubles.
Own capital of the organization in 2012 increased by 28,829,547 thousand rubles, which is primarily due to an increase in retained earnings.
The preliminary analysis of the liquidity of the balance sheet of OJSC Novatek was violated. This is explained by the fact that the organization has a surplus of cash and cash equivalents to cover its most urgent obligations.
In the period from 2010 to 2012, the value of the financial activity ratio was at the level of the standard value..
The autonomy coefficient in 2010 corresponds to the norm, but during the period under review its value either decreased or increased.
The financial stability coefficient in the period from 2010 to 2012 corresponds to the standard value, which indicates the stable financial position of the organization.
In the period from 2010-2012, OJSC Novatek had a lack of its own working capital, a surplus of the total amount of sources and operating capital, which indicates the normal financial stability of the company.
In 2011, the turnover period indicators increased for almost all indicators considered, with the exception of accounts payable and receivables. The turnover period for short-term credits and loans increased the most – by 5 days.
The organization's operating and financial cycles decreased by 11 days in 2012.
For three years, the type of financial condition of the organization remained unchanged and had normal financial stability.
Introduction
1. General assessment of the business activity of the enterprise. Financial cycle analysis
2. Assessment of business activity of the SPK (collective farm) named after Lenin
2.1 Organizational and economic characteristics of the SPK (collective farm) named after Lenin
2.2 Assessment of business activity indicators of the SPK (collective farm) named after Lenin
Conclusion
List of used literature
Introduction
The process of transforming a centrally planned economy and gradually replacing it with market relations in Russian Federation required not only the introduction of fundamentally new ways of managing, but also changes in attitude towards managing the activities of enterprises. Enterprises have switched to the widespread use of market methods to regulate their business activities. The main goal of entrepreneurial activity of enterprises has become to obtain profit, which serves as the most important source and prerequisite for the increase in capital, growth of income of the enterprise and its owners.
In a market economy, ensuring the effective functioning of enterprises requires economically competent management of their activities. An important role in the implementation of such management is given to the analysis of the economic activities of enterprises and the analysis of its business activity. With the help of such an analysis, a strategy and tactics for the development of the enterprise are developed, plans and management decisions are substantiated, their implementation is monitored, reserves for increasing production efficiency are identified, and the results of the activities of the enterprise, its divisions and employees are assessed. Based on the results of such an analysis, it is possible to determine the general financial condition of the enterprise, knowledge of which is necessary for making the right management decisions.
To survive in a market economy and prevent an enterprise from going bankrupt, you need to know well how to manage finances, what the capital structure should be in terms of composition and sources of education, what share should be taken by own funds and what by borrowed funds. You should also know such concepts of a market economy as business activity, liquidity, solvency, creditworthiness of an enterprise, profitability threshold, margin of financial stability (safety zone), degree of risk, financial leverage effect and others, as well as the methodology for their analysis.
Analysis of the business activity of an enterprise makes it possible to study the state of capital in the process of its circulation, to identify the enterprise’s ability to operate sustainably and develop in changing conditions of the external and internal environment.
A properly conducted analysis will make it possible to identify and eliminate shortcomings in the enterprise’s activities and find reserves for improving the financial condition of the enterprise and its solvency, predict financial results based on the actual conditions of economic activity and the availability of own and borrowed funds.
At present, when enterprises are characterized by economic independence, which consists in choosing the organizational form of the enterprise, types of activities, business partners, in determining sales markets for products (services), etc., and financial independence, which consists in its complete self-financing, production financial strategy, pricing policy, etc., analysis of the business activity of the enterprise has become one of the most important sources of information for the management of the enterprise, necessary to improve the efficiency of the organization.
In connection with the above, the topic of research is quite relevant at the moment.
The main goal of the study is to study the procedure for analyzing the business activity of an enterprise using the example of the SPK (collective farm) named after Lenin based on data from its financial statements. To achieve this goal, the following tasks were solved: - a general assessment of the business activity of the enterprise was studied, the calculation of business activity indicators and their importance for analyzing the profitability of the enterprise was examined in detail; - a practical analysis of the business activity of the agricultural production complex (collective farm) named after Lenin was carried out. The main sources of information for business analysis activities of the enterprise under study are its reporting balance sheet, profit and loss statements, capital flow statements, cash flow statements and other forms of reporting, primary and analytical data accounting, which decipher and detail individual balance sheet items.
The theoretical and methodological basis of the study was the work of domestic scientists, legislative and regulations on the topic being studied, as well as data from the accounting (financial) statements for 2002-2004 of the Lenin SPK [Appendices 1-6].
1. General assessment of the business activity of the enterprise. Financial cycle analysis
The stability of the financial position of an enterprise largely depends on its business activity.
Traditional economic analysis was largely concerned with comparing actual data on the results of production and economic activities of organizations with planned indicators. Then the total amount of deviations was decomposed into separate amounts due to the influence of various factors, both favorable and unfavorable, and proposals were developed on how to strengthen the influence of positive factors and weaken or eliminate the influence of negative factors.
In a market economy, the most important measure of an organization's performance is efficiency. The concept of “performance” consists of several important components of the financial and economic activities of an organization. Most general characteristic The effectiveness of financial and economic activities was considered to be turnover, that is, the total volume of sales of products (works, services) for a certain period of time. For organizations operating in market conditions, this indicator becomes profit.
Consideration of the essence of performance allows us to determine the main tasks of its analysis. They consist in, firstly, determining the sufficiency of the achieved results for the market financial stability of the organization, maintaining competitiveness, and ensuring an adequate quality of life for the workforce; secondly, to study the sources of occurrence and features of the impact of various factors on the performance; thirdly, consider the main directions further development analyzed object. One of the areas of performance analysis is the assessment of the business activity of the analyzed object. Business activity in the financial aspect is manifested primarily in the speed of turnover of its funds. Analysis of business activity consists of studying the levels and dynamics of various financial ratios - turnover indicators, which are very important for the organization, since:
Firstly, the size of the annual turnover depends on the speed of funds turnover;
Secondly, the size of the turnover, and, consequently, the turnover rate is associated with the relative value of semi-fixed expenses: the faster the turnover, the less of these expenses there are for each turnover;
Thirdly, the acceleration of turnover at one or another stage of the circulation of funds entails an acceleration of turnover at other stages.
It is well known that the financial position of an organization and its solvency depend on how quickly funds invested in assets turn into real money.
The length of time funds remain in circulation is influenced by various external and internal factors. TO external factors include: industry affiliation; scope of activity of the organization; the scale of the organization's activities; the impact of inflationary processes; the nature of economic relations with partners. Internal factors include: the effectiveness of the asset management strategy; pricing policy of the organization; methodology for assessing inventory and inventories.
Business activity is manifested in the dynamism of the organization’s development and its achievement of its goals, which is reflected in absolute cost and relative indicators. Indicators of business activity refer to indicators that provide information about the efficiency of the enterprise and the effectiveness of management. To analyze business activity, organizations use two groups of indicators: the first group includes general indicators asset turnover, and the second - asset management indicators.
Asset turnover indicators show how many times a year (or during the analyzed period) certain assets of the enterprise “turn over”; in this case, the turnover of funds invested in the organization’s property is assessed by the turnover rate, that is, the number of turnovers that the organization’s capital makes during the analyzed period or its components. The turnover rate shows the time it takes for the analyzed item to be converted into cash. Therefore, with an increase in the turnover rate, we can talk about an increase in the solvency of the organization.
The reciprocal value multiplied by 360 days (or the number of days in the analyzed period) indicates the duration of the turnover; in this case, the turnover of funds invested in the organization’s property is estimated by the turnover period, that is, the average period for which funds are returned to the organization’s economic activities , invested in production and commercial operations.
When calculating enterprise performance indicators (turnover and profitability indicators), the “Enterprise Balance Sheet” and “Profit and Loss Statement” reports are used.
