Determination of working capital requirements

The organization of the use of working capital in the enterprise provides for their formation, rationing, systematic analysis and ensuring the effectiveness of use.

To determine the company’s need for working capital, working capital is rationed. Rationing of working capital is understood as the process of determining the economically justified need of the enterprise for working capital that ensures the course of the production process in the planned rhythm and volume of production.

The minimum amount of working capital required to ensure the smooth operation of the enterprise is called the working capital standard.

The general standard of working capital of the enterprise is calculated only in monetary terms and is determined by summing up the working capital standards for individual elements:

Fobsch = Fps + Fnzp + Frbp + Fgp,

where FPZ – the standard of production stocks, rubles;

FNZP – standard of work in progress, rubles;

Frbp – the standard of expenses of future periods, rubles;

FGP – the standard of the stock of finished products in the warehouses of the enterprise, rubles.

Rationing of production stocks provides for the following stages in the development of the standard:

Determination of stock rates for groups of inventory in the days of security; Determination of the amount of one-day expenditure of this type of material values; Calculation of the private standard of production stocks in monetary terms by multiplying the one-day consumption by the stock rate in days.

The stock rate in days for purchased materials (raw materials, components and semi-finished products, etc.) determines the number of days of operation of the enterprise for which it is necessary to create a stock of these materials in order to ensure the continuity of the production process.

The rate of stock in days consists of the time of stay of the material in the form of current, insurance, transport and technological stocks.

The standard of working capital for individual elements of production stocks (FPi) is determined by the formula:

Fpzi = Zdi * Nzi,

where: Zdi, – the average daily demand of the i-th type of production stocks, rubles;

NZI – the general stock rate for the i-th type of inventory, days.

The average daily requirement for the calculation period is determined by the formula:

Zdi = Zmi / Dk,

where: Zmi – the need for the i-th type of production stocks for the planning period, rubles;

DK – the number of days in the planning period (in the calculations of rationing, a year is taken – 360 days, a quarter – 90 days, a month – 30 days).

Production stocks are rationed in kind and monetary terms. Depending on the purpose and service of production, they are divided into current stocks of raw materials, materials, fuel, containers.

The current stock is necessary to ensure the uninterrupted course of production at the enterprise in the period between the next deliveries. The current stock rate is taken, as a rule, equal to half of the average interval between the next two deliveries. It depends on the frequency and uniformity of deliveries, the distance between suppliers and consumers, the nature and volume of consumption of materials.

All other things being equal, the frequency of deliveries has a decisive impact on the formation of current stock rates. The smaller the intervals between two deliveries, the smaller the materials should be in stock, and therefore the less working capital will be required to cover them.

It would be wrong to set stock rates in sizes corresponding to the full duration of the intervals between two deliveries, since on the day of receipt of a certain type of raw material and materials, its stock is maximum (100%), while stocks of other types of materials can be minimal, since they are largely consumed.

In practice, commodity and material values are consumed daily and at the same time new batches of raw materials and materials arrive. As a result, the general state of reserves for each day is such that for some materials they are the maximum value, for others – the average, and for others – the minimum. In general, the size of the stock is close to half of the total stock of materials consumed in the enterprise. Therefore, when calculating the norms of the stock of materials, not the entire supply interval is taken, but only half.

An insurance or guaranteed stock is created in case of violations of the planned terms or consignments of deliveries, as well as violations in the planned conditions of consumption of materials. In practice, the safety stock is created in the amount of 30% – 50% of the current stock rate, or equal to the maximum time of deviations from the delivery interval.

The transport stock is created at the enterprise for the period when the materials are in transit after their payment.

Technological or pre-production stock is created in cases where the raw materials and materials entering the enterprise cannot be used in the production process immediately, but require appropriate additional preparation (drying, sorting, cutting, picking, etc.).

The norm of the preparatory stock is determined taking into account the specific conditions of production and includes time for receiving, unloading, processing documents and preparing for the further use of raw materials, materials and components.

Rationing of working capital in work-in-progress has its own characteristics that must be taken into account. The value of the standard of working capital in work in progress (FNZP) depends on the volume of production, the duration of the production cycle of manufacturing the product and the nature of the increase in costs in production.

The standard of working capital in work in progress is generally determined by the formula:

FNP = Sc *Tc *Knz,

where: Sc – average daily costs for the production of products, rubles;

Tc – duration of the production cycle in days;

Knz is the coefficient of increase in costs.

The average daily costs of production are determined by the ratio of the planned output of marketable products estimated at production cost (Ng * SPR) to the number of calendar days in the planned period (Dc):

Sc = Ng * SPR / Dc,

where: Ng is the plan for the release of marketable products in physical terms (pcs., tn, m, etc.).

To determine the standard of working capital in work-in-progress, in addition to data on the duration of the production cycle, it is necessary to know the degree of readiness of products. It is reflected in the coefficient of increase in costs (KNZ), which is determined by the ratio of the average cost of work in progress.
(C np) to the production cost of finished products (SPR):

Knz = Snp / S pr.

In the case of a uniform increase in costs, the cost of work in progress is calculated by the formula:

SNZ = Zm + 0,5 (Spr – Zm),

where Zm is the cost of raw materials, materials, purchased components and semi-finished products in the cost of production.

With an uneven increase in production costs, the calculation of this coefficient becomes more complicated and requires studying the nature of the increase in costs at the stages of the production cycle.

The standard of working capital of expenses of future periods (FRBP) can be determined by the formula:

FBP = FBP N + FBP Pl – FBP V,

where FBPN is the amount of funds in the expenses of future periods at the beginning of the planned period, rubles;

FBP pl – expenses incurred in the planned period, rubles;

FBP in – expenses written off to the cost of production in the planned period or repaid at the expense of special sources, rubles.

The standard of working capital in the stocks of finished products in the warehouses of the enterprise (FGP) is equal to the sum of the standards for certain types of finished products:

GWF = S OTG * Hgpj,

where: S otg – the average daily shipment of finished products at production cost in the planned period, rubles;

NGPj – the rate of stock of finished products for the j-th type of products, days.

The stock rate of finished products (NGPj) includes the time required for the acceptance of products from the workshops, the completion of the transport batch, the packaging and shipment of products, the preparation of documentation.

The amount of normalized working capital, determined according to separate standards, forms the total need (general standard) of the enterprise in working capital for the planned period in monetary terms.

This standard is one of the most important indicators that have a significant impact on the efficiency of the enterprise.