Current asset management in the enterprise

Figure 2.3.1. Structure of balance sheet of SPETSSTROY-SVYAZ Ltd for 2005-2009

Figure 2.3.2. Structure of current assets of SPETSSTROY-SVYAZ Ltd for 2005-2009

In order to study the structure of current assets the total structure (the proportion of stocks in total assets, receivables in current assets, cash in current assets, etc.) and internal (the proportion of stocks of work in progress in the overall value of stocks, long-term receivables debt in the total value of accounts receivable, etc.) are to be evaluated.
In 2005 the largest share in total current assets took receivables (short term). In 2006 this indicator increased by 62%. This shows that the organization increased its sales over the period. Favorable here is that the receivables are short-term (current). However at less significant change in the proportion of the absolute value of receivables in the coming years has increased. And in 2009 it was 426% of the amount in 2005, with sales in 2009 amounted to 157% of sales in 2005.
For a more detailed analysis it is necessary to investigate the quantity, composition, structure and dynamics of its individual species, their turnover. Analyzed production requires stocks, as evidenced by the share of stocks in the total value of current assets.
Figure 2.3.3. Dynamics of change of the proportion of components of current assets

It can be observed at figure 2.3.3 that in 2007 the largest changes referred to the share of cash. When considering sales for a calendar year seasonality can be observed. In the first quarter customers form a portfolio, and in the fourth quarter there are the highest sales. In 2007, a large amount of cash was received in the last days of the year, making it difficult to use it.
It can also be noticed that in 2008 great changes have taken place in the dynamics of proportion change of work in progress. In 2007 in the enterprise there was implemented a new type of activity, development activities (R & D). Residues in progress - is an incomplete implementation phase of R&D. Since this type of activity is on average 5% in total sales the figures for the unfinished product does not have a major impact on the turnover of working capital.
The primary measure of effectiveness of working capital is the rate of turnover. Calculation of turnover of any assets is held by dividing the revenue of the period by the average value of these assets over the period. Since the company's revenue is formed as cumulative total for the year and the cost of an asset is the torque figure (i.e. the value on the balance sheet date), the comparison of turnover indicators for different time intervals (for example, a year and the first quarter) is incorrect. In this regard, an analysis of turnover indicators based on annual data for 2005-2009 is held.
Table 2.3.1. Main turnover ratios