How to choose the enterprise working capital management strategies in order to increase the production relative value added

Abstract

The article presents the solution how to measure the working capital and financing sources, and how to choose the rational method of their management. Basing of information concerning results of the metallurgical branch activity criteria for evaluating the strategy how to manage working capital have been selected. Methods for evaluating the strategy process have been developed basing on data on the magnitude of the relative amounts of working capital and short-term funding sources. Diagnosis of current assets and sources of their formation is carried out in two stages. The first stage sets the type of model used to manage current assets and sources of their coverage. In the second phase, the optimization of integrated management strategies for working capital is performed. The paper shows the distribution used in factories and mills industry strategies by frequency of use. In the background of diagrams information is provided on the most effective options of integrated strategies, including strategies under financial crisis situation. The diagnosis of the financial and economic condition of the company is performed by means of an integral index, based on the added value which considers the interests of the owners of the enterprise , of its workers, and of the state. The integral indicator is determined by the size and structure of current assets and current liabilities. We propose an algorithm predicting emerging and actual crisis situations for the company through the short term downward trend of the integral index, as well as by increase of the oscillation of indicators (moving standard deviation and coefficient of variation). It helps to optimize the problem in order to identify the company’s potential to overcome the crisis. The paper shows that the application of the developed algorithm makes it possible to determine optimal parameters of working capital management, maximizing the value of criteria selected.