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Working capital management


Working capital management isquite an urgent issue of our time. This term is understood as that part of the enterprise's funds that is invested in the commodity-material assets and assets of the enterprise with a circulation period of not more than a year. These costs are fully returned to the investor, as they are included in the cost of the products.

Working capital management of the organizationis based on two components, such as circulation funds and negotiable ones. The first form the resources of the enterprise used in the sphere of circulation. And revolving funds include that part of assets that are involved in the production process, while losing material form, and completely transfer their own cost to the finished product. However, they are in circulation no more than one production cycle.

Working capital management is based onrational use of the funds of these funds. And for this it is necessary to clearly know which elements are included in each of them. So, revolving funds include, first of all, the reserves required to start the production cycle, that is, raw materials and materials, energy and other items of labor. In addition, the same group can include such items as semi-finished products manufactured in the enterprise, and work in progress, that is, products that did not go through all the stages of the production cycle. A good example is the individual parts that enter the assembly shop. Expenses of future periods are considered a component of a revolving fund. Such costs involve the display of funds that are used to modernize and improve existing products and technologies at the present time, but will be used in the manufacture of goods in the subsequent period.

With circulation funds, the situation is simpler, sincethey include amounts of cash in the cash departments and accounts of the enterprise used in the calculations, unrealized finished goods and those goods that are in transit, and therefore can not be considered realized. For the rational use of these resources, it is necessary to prepare planned and actual estimates and reporting. After all, qualified management of working capital positively affects the results of the firm's activities, namely, on the amount of net income that remains at the disposal of the enterprise. The specialist gets the opportunity not only to choose the most profitable way to include the costs in the price of finished products, but also to reduce their costs as much as possible by upgrading or searching for suppliers of cheaper raw materials.

Of course, the main goal of each leaderis to obtain as much profit as possible at the current level of costs. In order to maintain the company's image at the proper level, it is necessary to be responsible for the quality of products or services offered. In order for the planned indicators to be in line with the current ones, certain working capital management methods should be chosen that will allow developing a clear plan of action and achieving tangible results. For example, determining the rate of working capital allows you to establish the minimum amount of resources that is required to ensure an uninterrupted production cycle.

Every enterprise must make up its ownAccounting policy, which reflects the goals and objectives of the company. In addition, it allows you to balance your expenses in terms of taxation. An increase in the speed of the production cycle leads to an accelerated turnover of capital, which means that it quickly brings profit to the head. Of course, for the effective implementation of each method, a specialist should be appointed who will manage working capital.

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