Abstract
The financial position of a company depends on its liquidity, or otherwise, on how soon the funds invested in the assets turn into real money. The growth of non-payments complicates the company’s rhythmic activities (purchase of raw materials, payment of labor and other expenses generated from revenue) and leads to an increase in accounts receivable. At the same time, excessive diversion of funds to production stocks, work in progress, finished products, etc. leads to the deadening of resources and inefficient use of working capital. Successful solution of the problem of working capital optimization can significantly increase the financial stability of the company, refinance and repay the debt, and significantly facilitate debt restructuring. Therefore, effective management of the company’s working capital is the key to increasing the turnover of property and sales volumes. It involves not only the search for and attraction of additional sources of financing, but also their rational placement in the current assets of the company. The article presents the author’s model of analyzing the profitability of working capital. The article reveals the influence of factors affecting the profitability of working capital and author’s methodical approach to his calculations (method # 2 integral factor analysis, developed by Filatov E.A.). The article presents the author’s analytical, systematic statistical analysis of key performance indicators reveal the influence to change the profitability of working capital of the companies in the Irkutsk region of the Russian Federation.
Highlights
Working capital is a mobile asset in cash or in the form of inventory, which can be converted into cash during a single production cycle [1].The essence of the company's current assets is determined by their economic role, the need to ensure the reproduction process, which includes both the production process and the circulation process
Based on the methods of deterministic factor analysis developed by the author [8, 9], we estimate the degree of influence of three factors on the change in the return on current assets (RCA) of companies in the Irkutsk region of the Russian Federation
The final change in the RCA of companies in the Irkutsk region was positively influenced by: - an increase in the capital intensity of current assets by 8.97%, caused an increase in the studied indicator by 0.94%; - an increase in the turnover of assets by 2.76%, caused an increase in the studied indicator by 0.98%; - an increase in the return of sales by 6.74%, caused an increase in the studied indicator by 13.55%
Summary
Working capital is a mobile asset in cash or in the form of inventory, which can be converted into cash during a single production cycle [1].The essence of the company's current assets (funds) is determined by their economic role, the need to ensure the reproduction process, which includes both the production process and the circulation process. Working capital is a mobile asset in cash or in the form of inventory, which can be converted into cash during a single production cycle [1]. Unlike fixed assets that repeatedly participate in the production process, working capital functions only in one production cycle and, regardless of the method of production consumption, completely transfers its value to the finished product. Working capital is the basis of the company's business. If it is in excess, it means that the company is not developing fast enough, does not invest in new projects, resources do not work. If it is not enough, the financial stability decreases, the profit falls.
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