Effective use of current assets by enterprise
Abstract
In today's business environment, each enterprise places the main emphasis on addressing the issues of stability of operation and profit maximization. In order to achieve these goals, we need a properly selected, clear and effective asset management policy for the enterprise, in which working capital plays a significant role. The relevance of the current problem of working capital management is also due to the fact that the efficiency of their formation, regulation and use depends on the optimality of the level of liquidity, solvency and, as a consequence, financial stability of the enterprise. Lack of working capital puts the company on the path of bankruptcy, which causes them to think about improving their management system. The lack of funds and their surplus have a significant impact on the enterprise, causing disruptions in the production or supply of raw materials, which reduce the expected profit. That is why it is very important to accelerate the attraction of working capital both from internal and external sources. Qualified cash management enables interested parties (external and internal users) to make certain optimal management decisions that can significantly affect the end result of the enterprise's financial and economic activities in the future.
Since the rational and economic use of current assets is of great importance for the economic situation of the enterprise, we have undoubtedly paid great attention to the efficiency of their use. In turn, the main indicator of efficiency of use is the turnover rate and the duration of one revolution. Having analyzed them, it would be advisable to recommend the following measures to improve their effectiveness:
- at the stage of creation of production stocks - rational use of material resources, improvement of normalization, elimination of normative stocks, adjustment of work of transport, optimum choice of suppliers, etc.
- at the stage of work in progress - shortening the duration of the production cycle, the introduction of advanced technology and technologies, the development of standardization and unification, the improvement of the system of economic incentives and more.
- at the stage of circulation - rational organization of sales of products, acceleration of document circulation, adherence to contractual payment discipline, use of marketing levers of sales activation (advertising), etc.
The use of current assets is an indispensable condition for the existence of an enterprise in a competitive environment. To a large extent, it depends on the perfection of the methods of analysis of the effectiveness of their use, which in turn allows to improve the quality of management decisions not only to increase the efficiency of the use of current assets, but also the efficiency of the enterprise as a whole.
In carrying out its main activity, the company enters into financial relations with the state in payment of taxes and fees. The content of the financial activity of the company is to ensure the planned receipt and payment of funds, the implementation of payment and settlement discipline, to achieve the optimal ratio between equity and borrowed capital and its effective use. An indispensable condition for an enterprise's financial soundness is compliance with specific relationships between the financial flows that cover the debts and liabilities of the enterprise, both in the present and in the future.
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