Current asset management in the enterprise

Table 2.2.3. Liabilities structure

Liability group	2005	2006	2007	2008	2009
Group L1. Most urgent liabilities	27 329	50 111	39 014	86 630	52 341
Group L2. Current liabilities	0	0	0	6 000	4 676
Group L3. Long-term liabilities	12 803	8 513	45 957	18 376	29 570
Group L4. Permanent liabilities or stable	15 729	32 262	34 697	16 471	20 586

To repay current obligations various kinds of assets with different turnover, i.e. the time required to turn them into cash, can be used. So depending on what types of current assets are taken into account the liquidity is evaluated using different ratios. The general idea of such an assessment is to compare current liabilities and assets used for the repayment. Current assets (liabilities) include those with maturity up to one year.
Table 2.2.4. Financial liquidity ratios

Ratio	Calculation method	Recommended value	2005	2006	2007	2008	2009
Current ratio	L1=(А1+0,5*А2+0,3*А3)/(L1+0,5*L2+0,3*L3)	≥1	0,55	0,57	0,92	0,45	0,45
Cash ratio	L2 = А1/(L1+L2)	>0,2-0,7	0,23	0,15	0,67	0,13	0,02
Quick ratio	L3 = (А1+А2)/(L1+L2)	Acceptable - 0,7-0,8, desirable ≥ 1,5	0,85	1,19	2,11	1,02	1,29
Acid test ratio	L4 = (А1+А2+А3)/(L1+L2)	Not less than 2,0	1,34	1,37	2,58	1,17	1,54
Current assets to equity ratio	L5 = А3/((А1+А2+А3)-(L1+L2))	The decrease in dynamics - a positive fact	1,44	0,48	0,29	0,88	0,46
Own funds ratio	L6 = (L4-А4)/(А1+А2+А3)	Not less than 0,1	-0,1	0,15	0,15	-0,02	0,01

On the basis of data (see appendix 2) analysis it can be concluded that considered enterprise is not able to make payments for all types of obligations - both immediate and in remote (Current ratio <1).

Current Ratio characterizes the company's solvency in the light of forthcoming earnings from debtors. It shows how much of the current liability organization can cover in short term provided the full repayment of debts. The growth rate in the dynamics is regarded as a positive feature of financial-economic activity. However, too much of its value is not desirable, because it may indicate an inefficient use of resources, expressed in slowing the turnover of funds invested in inventory, undue increase in accounts receivable, etc.
Using its own funds the company can repay in short term through cash only 2% of the debt (Cash ratio = 0.02). However short-term obligations can be fully repaid from the proceeds of the calculations (Quick> 1). The acid test ratio in 2009 is equal to 1.54. This means that the company can pay current liabilities, mobilizing all the current assets. Analysis the own funds ratio shows that since 2008 the enterprise has virtually no working capital for its financial stability.
For normalization of work of the enterprise and exit of the crisis situation the company needs to undertake a number of institutional arrangements. The main factors of liquidity and solvency of the organization are the state and efficiency of using circulating assets. One of the things that should be paid special attention of the company's management is management of current assets, reduction of losses in the production and financial cycle of current assets.

2.3. Analysis of company’s current assets for the previous periods

Consider the structure of the company's balance sheet (see Appendix 2), namely, the proportion of current assets to total assets of the enterprise.
As it can be seen at the figures 2.3.1 and 2.3.2, proportion of current assets in balance sheet structure is more than 70%, with the largest portion of current assets of accounts receivable. This can be explained by the fact that state and departmental businesses constitute the bulk of customers of the enterprise.