Current Assets of Enterprise Definition & meaning and

Current Assets of Enterprise Definition & meaning and structure of current assets. 2. Factors and ways for enhancement of assets usage and turnover acceleration. 3. Methodology of Current Assets' Quota Setting. 1

1. Definition & meaning and structure of current assets 2

Current Assets cash and other assets expected to be converted to cash or consumed either in a year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. (See also Accounting Standard 2 «Balance») 3

CURRENT ASSETS Working Capital Circulating Assets Manufacturing Finance 4

Working Capital – 5

Structure of manufacturing current assets Low value and rapidly amortized items, Row materials, Main and accessory materials, fuels, Bought semi-finished products and , Renewal parts and replacements, containers, Construction materials, Other materials to be consumed in the operating cycle Inventory G-i-P and SFP of own manufacturing виробництва Current biological assets 6

Structure of Circulating Assets Finished Goods in Warehouse of Enterprise Goods (Commodities) Bills accepted Debs Short-term Investments Cash and Cash Equivalents Other current assets 7

Current Assets Cycle Inventory G-i-P and SFP FP Debs Cash Inventory Manage-ment / Logistic Manu-facturing Stock of Goods Sale Row and other materials supply Let’s get it started Moving to Stock Shipping to consumers Getting Money 8

2. Factors and ways for enhancement of assets usage and turnover acceleration 9

Factors of Current Assets Usage DETAILED (by elements): Index of FP output Index of material usage 10

Factors of Current Assets Usage GENERAL: material capacity (MC) MC = М / CO, де М – charges of material resources during accounting period; CO – commodity output in accounting period. Output-materials ratio (OMR) 11

Factors of Current Assets Usage Index of Inventory Turnover(Iit): Iit = GS / CAс, де GS –sum of goods sold in accounting period; ОКс – average balance of current assets in accounting period. 12

Factors of Current Assets Usage Average time of one turnover (Тto): Тto = Т / I it where, Т – length of accounting period (days). 13

Factors of Current Assets Usage 14

Haw to make the turnover of current assets faster Optimize the inventory stocks Optimize debs of enterprise Shorten the time of production cycle and of operational cycle. Improve logistic and inventory management. 15

3. Methodology of Current Assets' Quota Setting 16

Quota Setting is Obligatory for: In manufacturing: Inventory Goods-in-progress, semi-finished products Finished Goods in deposit Prepaid expenses In services: Stock of materials needed for services Commodities Prepaid expenses Debs for goods, works, services in condition of trade credit 17

Inventory Behavior ₴₴₴ Warehouse Discharge Warehouse Discharge Warehouse Discharge Time ? 18

Inventory Behavior ₴₴₴ Time Average Demand Safety Stock Breaking of Supply Schedule Reorder Point 19

Inventory Standard Sinv i = MDAY i х QuotaDAY i де MDAY i – average daily use of i-material (₴), QuotaDAY i - quota of material stock (days). 20

SFP Standard SSFP i = QD i х Сi х ТT i х ICBU i where QD i – average daily production in physical volume (quantity), Сi – manufacturing costs of i-product, ТT i – time of production cycle of i-product, ICBU i – cost build-up factor ICBU i = 0,5(1+SPМ i), де SPМ i – share of primary material costs in manufacturing costs of i-product. 21

FP stocks Standard SFP i = VД i х QuotaD i where VD i – value of daily FP production volume, QuotaD i – quota of FP stocks (days). 22

Prepaid Expenses Standard SPE = PEВ + PEY – PEC Where PEВ – prepaid expenses on the beginning of the year, PEY – prepaid expenses, made during the year, PEC – prepaid expenses covered during the year. 23