Elements that make up the general standard of working capital. How to normalize the company's working capital? Problems to solve independently

Note. The text of the problem was taken from the forum.

Determine working capital standards by element and general standard based on the following data:

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 select calendar days and assume that the enterprise operates in one shift. We have 365 days in a year.

It is completely unclear what is hidden behind the words “cost of one part”. Is this direct cost? Full cost? Production cost? For the purposes of the solution, we assume that the average actual production cost is taken into account on account 26 “Finished products”.

One more note. It will still not be possible to determine the general working capital standard from the task data, since there is no data on safety stock, loading and unloading standard, etc. But for the holy purpose of "solving the problem" we will ignore all this... I wonder how many businesses will lose their money being managed by "specialists" who are trained on such tasks?

Solution.
Let's determine the daily (daily) production program.
500 / 365 = 1.36986 parts per day

Then:
Stock standard for basic materials
19 * 1.36986 * 71,430 = 1,859,132.90 hryvnia

Standard for stock of auxiliary materials
4,285,800 / 365 * 36 = 422,709.04 hryvnia

Fuel and lubricants stock standard
2,285,760 / 365 * 27 = 169,083.62 UAH.

Finished product inventory standard
5 * 107,145 * 1.36986 = 733,868.25 UAH.

Work-in-progress inventory standard
(107 145 - 71 430) * 1,36986 * 38 / 2 = 929 566,45

Having summed 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 standard will differ from the obtained value.
1,859,132.90 + 422,709.04 + 169,083.62 + 733,868.25 + 929,566.45 = 4,114,360.26 hryvnia

Answer: 4,114,360.26 hryvnia

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 are spent. Determine the standard for working capital in work in progress.

Solution.

Knz - coefficient of increase in costs in work in progress.

Knz = (First + 0.5*С) / (First + С)

Working capital ratio- this is the minimum required amount of funds to ensure the economic activities of an organization or enterprise. The organization's working capital standard is established for:

• main activity,
• major repairs carried out in-house,
• housing and communal services,
• subsidiary, auxiliary and other farms that are not on an independent balance sheet.

How to determine the working capital standard

The working capital standard is determined by summing the product of the one-day consumption of material assets, production of products and the stock standard in days for the corresponding types of working capital.

One-day consumption of material assets or production output at enterprises with a uniformly increasing production volume throughout the year is calculated according to the cost estimates of the 4th quarter. of the planned year, since the volume of production costs, as a rule, is greatest in this quarter.

In enterprises with a seasonal nature of production, one-day expenses are calculated according to the cost estimate for 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 item in the quarterly cost estimate by 90 days.

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Grouped in various ways. Usually isolated two groups, differing by degree of planning: normalized and non-standardized working capital.

Standardized working capital— working production assets and finished products, i.e. working capital in inventory inventories.

Non-standardized working capital- circulation funds are usually not standardized, they include funds in settlements, cash in the cash register of the enterprise and in bank accounts.

Determining the enterprise's need for its own working capital carried out in the process of standardization, i.e. determining the working capital standard.

Rationing of working capital

Rationing of working capital- the process of determining the minimum, but sufficient (for normal flow) amount of working capital at the enterprise, i.e. This establishment of economically justified (planned) stock standards and standards for elements of working capital.

The value of the standard is not constant. The size of own working capital depends on the volume of production; conditions of supply and sales; range of products; applied forms of payment. It should be noted that this is one of the most volatile indicators of current financial activity.

Rationing of working capital is carried out in monetary terms. The basis for determining the need for them is production cost estimate for the planned period. At the same time, for enterprises with non-seasonal nature of production It is advisable to take the data from the 4th quarter as the basis for calculations, in which the production volume is, as a rule, the largest in the annual program. For companies with seasonal nature of production- data from the quarter with the lowest production volume, since the seasonal need for additional working capital is provided by short-term bank loans.

To determine the standard, it is taken into account average daily consumption of standardized elements in monetary terms.

Working capital rationing process

The standardization process consists of several successive stages where private and aggregate standards are established. At first stock standards are being developed for each element of standardized working capital.

Norm- this is a relative value that determines the stock of working capital; as a rule, norms are established in days.

This indicator is relatively stable and may change in the event of: changes; suppliers; technologies and production organization.

Further, based on the stock and consumption rate of this type of inventory, it is determined the amount of working capital required to create normalized reserves for each type of working capital. This is how they are determined private standards.

Standard for a separate element of working capital calculated by the formula:

• N is the standard of own working capital for the element;
• O - turnover (consumption, output) for a given element for the period;
• T is the duration of the period;
• NZ is the working capital stock norm for this element.

Working capital ratio represents the monetary expression of the planned stock of inventory items, the minimum necessary for the normal economic activities of the enterprise.

General working capital standard

General working capital standard consists of the sum of private standards:

N total = N p.z + N n.p + N g.p + N b.r,

• Np.z - production reserve standard;
• Nn.p - work-in-progress standard;
• Ng.p - finished product standard;
• Nb.r is the standard for future expenses.

Inventory standard

The production inventory standard for each type or homogeneous group of materials takes into account the time spent in preparatory, current and safety stocks and can be determined by the formula:

N p.z = Q day (N p.z + N t.3 + N line),

• Q day - average daily consumption of materials;
• N p.z. — norm of preparatory stock, days;
• N t.z. — current stock norm, days;
• N page - safety stock norm, days;

Preparatory stock is associated with the need to receive, unload, sort and store inventory. The time standards required to complete these operations are established for each operation for the average size of delivery based on technological calculations or through timing.

Current stock- the main type of stock necessary for the uninterrupted operation of the enterprise between two next deliveries. The size of the current stock is influenced by the frequency of supplies of materials under contracts and the volume of their consumption in production. The rate of working capital in the current inventory is usually taken in the amount 50% of the average supply cycle, which is due to the supply of materials from several suppliers and at different times.

Technological stock is created in cases where this type of raw material requires pre-processing or aging to give it certain properties. This stock is taken into account if it is not part of the production process. For example, when preparing for the production of certain types of raw materials and materials, time is required for drying, heating, grinding, etc.

Transport stock is created in case of exceeding the terms of cargo turnover compared to the terms of document flow at enterprises located significant distances from suppliers.

Safety stock- the second largest type of reserve, which is created in case of unforeseen deviations in supply and ensures the continuous operation of the enterprise. Safety stock is usually accepted in the amount of 50% of current stock, but may be less than this value depending on the location of suppliers and the likelihood of supply disruptions.

Rationing of work in progress

The value of the working capital standard in work in progress depends on four factors:

• volume and composition of products produced;
• duration ;
• production costs;
• the nature of the increase in costs during the production process.

The volume of production directly affects the amount of work in progress: The more products are produced, the larger the work in progress will be.. Changing the composition of manufactured products affects the amount of work in progress in different ways. With an increase in the share of products with a shorter production cycle, the volume of work in progress will decrease, and vice versa.

Standardization methods

The following methods of rationing working capital are distinguished:

Direct counting method provides for a reasonable calculation of reserves for each element of working capital, taking into account all changes in the level of organizational and technical development of the enterprise. This method is very labor-intensive, but it allows you to most accurately calculate the company's need for working capital.

Analytical method is applied in the case when in the planning period there are no significant changes in the operating conditions of the enterprise compared to the previous one. In this case, the calculation of the standard working capital is carried out on an aggregate basis, taking into account the relationship between the growth rate of production volume and the size of the normalized working capital in the previous period.

With the coefficient method the new standard is determined on the basis of the standard of the previous period by introducing changes into it taking into account production conditions; supplies; sales of products; calculations.

In practice, the most common method is direct counting. The advantage of this method is its reliability, which makes it possible to make the most accurate calculations of partial and aggregate standards.

Working capital standard in production inventories , as well as in work in progress, can be a significant characteristic of the efficiency of the enterprise, as well as a criterion for assessing the quality of work of the company’s management. We will consider in this article what formulas can be used to calculate the corresponding standards.

What are the standards for fixed assets in inventories or work in progress?

Any working capital standard (hereinafter - OS) is a characteristic that reflects the optimal value of fixed assets in the form of enterprise assets (represented by inventories or work in progress), which, on the one hand, is sufficient to maintain a continuous production cycle, on the other hand, is minimal in terms of expenses for the purchase and maintenance of these assets.

In the context of inventories and work in progress, the economic role of the working capital standard will be to determine the required volume of fixed assets based on the objective characteristics of the business model that have developed at a certain point in time (recorded in a certain period).

These characteristics can be presented, for example:

1. For MPZ:

• cost of assets;
• dynamics of asset consumption;
• duration of the asset processing cycle in production;
• the degree of reliability of supplies of goods and materials (for example, in the context of the duration of possible delays in deliveries, the likelihood of supply interruptions).

2. For work in progress items:

• the cost of production of finished goods (the production of which at a certain stage forms objects of work in progress);
• duration of the production cycle;
• the ratio of the value of production costs for the production of work in progress objects to the cost of the finished product.

But first of all, let’s determine how these standards can be used in practice from the point of view of enterprise managers making management decisions.

Why it may be necessary to determine the working capital standard in inventories or work in progress

Both working capital standards - in inventories and work in progress - are calculated, as a rule, for the period corresponding to the full production cycle. Namely:

• the period as a set of business transactions from the moment of receipt of inventories at the workshop until the moment of acceptance from this workshop of goods for the production of which the corresponding inventories were used (if we talk about the standard of working capital in the production inventory);
• period as a set of business transactions within which, at one or another stage of production of goods, an object of work in progress is formed (if we talk about the OS standard in work in progress).

Both standards can:

1. Be a reference point for assessing the quality of inventory management and work in progress.

If responsible managers allow a decrease in the actual indicators for fixed assets in inventories or work in progress, serious difficulties may arise in the operation of the enterprise, including stopping production.

In turn, an excess of actual indicators over standard indicators may indicate ineffective use of the enterprise’s funds.

The fact is that inventories and work in progress are assets that are significantly less liquid than cash. In most cases, cash reserves are difficult to use to purchase other assets, extremely difficult to pay off liabilities, and almost impossible to purchase securities. From this point of view, having more cash at management's disposal is almost always preferable to having an excess inventory of inventories.

In order to correct the situation, management decisions can be made, mainly of a disciplinary nature, aimed at improving the quality of execution by responsible managers of the requirements for the volume of OS in accordance with the standards.

2. Be a reference point for assessing the effectiveness of the business model.

If it turns out that OS standards in inventories or work in progress are significantly higher than those of individual competing firms or the industry average (with the same volume of output of goods produced by the compared firms), then this may indicate an ineffective enterprise management model.

In order to correct the situation, management decisions can be made aimed at modernizing business processes that affect the value of OS standards in inventories or work in progress. For example, this could be the introduction of new technologies that reduce the cost of goods, the search for new suppliers who deliver materials without interruption, etc.

Let us now consider what formulas will be used to determine the standards for working capital in inventories and work in progress.

How to determine working capital standards for inventories (calculation formula)

The common formula for the working capital standard for industrial inventories has the following structure:

Refinery = SEB × (TEK + STR + TR + TECH),

Refinery - working capital standard for production inventories;

SEB - cost (cost of purchase, release) of production inventory (in rubles);

TEK - the volume of the current stock (in a given unit of measurement - for example, in tons);

STR - volume of safety stock;

TR - volume of transport stock;

TECH - volume of technological stock.

The oil refinery indicator is thus expressed in monetary terms.

Each of these components of the formula depends on the specifics of the organization of production at a particular enterprise and can depend on a wide range of factors.

1. The SEB indicator corresponds to the actual cost of a specific inventory, everything is obvious here.

2. The TEK indicator (necessary to ensure a full cycle of uninterrupted production) is calculated using the formula:

TEK = SUT × BP,

SUT is the average volume of consumption of inventory per day;

BP is the duration of the full production cycle in days.

2. The TFR indicator (necessary in case of interruptions in the supply of goods) is calculated using the formula:

0.5 × SUT × RP,

RP is the expected average difference between the planned and actual delivery time of materials.

3. The TR indicator (necessary in case of delay of a vehicle en route carrying goods from the supplier) is calculated using a similar formula:

0.5 × SUT × ZTS,

ZTS is the expected average delay of a vehicle from the supplier.

4. The TECH indicator (reflecting the amount of technological losses in production and, as a consequence, the need to replenish the inventories by the corresponding amount) is calculated using the formula:

(TEK + STR + TR) × NORM,

NORM - established standard for technological losses.

Example

The company produces concrete, and for this it uses a type of concrete material such as sand. Let's agree that:

• the company purchases sand at a price of 2,000 rubles per ton (SEB);
• the full concrete production cycle is 10 days (BP);
• the average daily sand consumption is 3 tons (AD);
• the expected average difference between planned and actual sand supplies is 2 days (DP);
• the expected average delay of the supplier's vehicle in transit is 1 day (ZTS);
• The standard for technological sand losses is 2% (NORM).

We calculate the volumes of reserves:

TEK = 3 × 10 = 30 tons;

STR = 0.5 × 3 × 2 = 3 tons;

TR = 0.5 × 3 × 1 = 1.5 tons.

TECH = (30 + 3 + 1.5) × 0.02 = 0.69 tons.

The standard for working capital in production inventories will be:

Refinery = (30 + 3 + 1.5 + 0.69) × 2,000 = 70,380 rubles.

How to determine the standard for work in progress (as a factor in the economic efficiency of an enterprise)

Common formula for working capital standards in work in progress has the following structure:

NP = (NE × SP × SC) / PERIOD,

NP - OS standard for work in progress;

SV is the average duration of the production cycle for the release of goods;

SP - the cost of production of this product during the reporting period;

KZ - cost increase coefficient (shows the ratio of the cost of an inventory item to the cost of the finished product);

PERIOD - the number of days in the reporting period (for which the IR indicator is considered).

The short circuit coefficient can be calculated using the formula:

KZ = (MPZ + 0.5 × CZ) / (MPZ + CZ),

MPZ - costs of raw materials and supplies for the production of goods during the analyzed period;

TsZ - shop costs (for electricity, maintenance of machines and equipment).

Example

The company produces concrete. Let's agree that:

• the cost of its annual volume is 3,000,000 rubles (SP);
• reporting period - year, 365 days (PERIOD);
• the average duration of the production cycle is 10 days (DC);
• costs for raw materials and materials for concrete - 2,000,000 rubles (MPZ);
• shop costs - 1,000,000 rubles (CZ).

1. Find the short circuit indicator, which will be:

KZ = (2,000,000 + 0.5 × 1,000,000) / (2,000,000 + 1,000,000) = 0.83.

2. Find the NP indicator, which will be:

NP = (10 × 3,000,000 × 0.83) / 365 = 68,219.18 rubles.

Results

The standard for working capital in the inventories, as well as standard of working capital in work in progress are among the key criteria for assessing the effectiveness of an enterprise’s business model. The lower they are, the more efficient production can be considered.

You can get acquainted with other significant economic indicators that characterize the efficiency of an enterprise in the articles:

1. Rationing of working capital

Problem 1.

The consumption of materials at the enterprise for the quarter is 360 thousand rubles. The standard supply of materials is 25 days. Determine the material stock standard for the quarter.

Solution

Thousand rub.

Task 2.

Determine the working capital standard for inventory and tools in use, if the working capital standard per person is 200 rubles, the number of workers at the enterprise is 700 people. Working capital is written off for expenses in the amount of 50% when the funds are put into operation and 50% after the end of their service life. Service life is assumed to be 2 years.

Solution

thousand roubles.

Solution

2000 0.27 = 540 thousand rubles.

Problem 4

To ensure the production and sale of products, a certain amount of working capital is required. Production program – 700 products per year. The cost of one product is 1500 rubles. The coefficient of increase in costs in work in progress is 0.66. Material consumption for one product – 1000 rubles. the stock standard is 40 days. The stock norm for finished products is 5 days. The duration of the production cycle is 25 days. Determine the standard working capital by elements: production inventories of materials, work in progress and finished goods, the total amount of normalized working capital.

Solution

1. Material stock standard:

thousand roubles.

2. Work in progress standard:

thousand roubles.

3. Finished product standard:

thousand roubles.

4. The total amount of standardized working capital:

Thousand rub.

Problem 5

Determine the standard for working capital in work in progress. Production output per year is 10,000 products. The cost of the product is 800 rubles. The coefficient of increase in costs in work in progress is 0.5. production cycle duration is 5 days.

Solution

thousand roubles.

Problems to solve independently

Problem 6

Calculate the amount of production stock of materials to ensure the production program of the enterprise in the amount of 4000 products per year. Materials are supplied once a quarter, the consumption rate of materials is 90 kg.

Problem 7

To ensure the rhythmic production and sale of products, a certain amount of working capital is required in the production reserves of material resources. The production program for product “a” is 500 pieces, “B” is 300 pieces. Data on material consumption are given in the table.