Turnover analysis allows you to assess the organization’s ability to generate income through the “money – goods – money” turnover. As a result of turnover analysis, you can understand the conditions of material supply, sales of finished products, terms of settlements with buyers and suppliers, etc.

What is turnover?

Turnover- this is a value characterizing the time period during which the complete circulation of goods, funds, or the number of these circulations during a time period is carried out.

Thus, the value of the asset turnover ratio equal to 3 shows that the organization during the year receives revenue three times the value of its assets (assets “turn over” 3 times during the year).

Turnover is often calculated in terms of the number of days it takes to complete one turn. To do this, 365 days are divided by the annual turnover ratio. For example, an asset turnover ratio of 3 shows that assets turn over on average in 121.7 days (i.e., during this period, revenue is received equal to the value of the organization’s assets).

Turnover ratios

Turnover ratios– show the intensity of use (turnover rate) of certain assets or liabilities. Turnover ratios are indicators of the business activity of an enterprise.

Among the most popular turnover ratios in financial analysis are:

• turnover of current assets
• inventory turnover
• accounts receivable turnover
• accounts payable turnover
• asset turnover
• equity capital turnover

The higher the asset turnover ratio, the more intensively the assets are used in the organization’s activities, the higher the business activity. However, turnover is highly dependent on industry characteristics. In trade organizations where large volumes of revenue flow, turnover will be higher; in capital-intensive industries – lower. A comparative analysis of the turnover ratios of two similar enterprises in the same industry can show differences in the efficiency of asset management. For example, a high turnover of accounts receivable indicates a more efficient collection of payments from customers.

• Money cycle
• Inventory turnover
• Equity turnover

Working capital turnover

Working capital turnover(eng. working turnover capital) - characterizes the speed of turnover of working capital from the moment of payment of material assets until the return of money for sold products to a bank account. The amount of working capital is calculated based on its total size minus the balance of funds in the company’s bank account.

With the acceleration of turnover with the same volume of products sold, the company requires less working capital. If the turnover of working capital accelerates, this reduces the need of enterprises for working capital and allows the use of monetary and material resources more efficiently. Working capital released from production can be used in other branches of production. Thus, the working capital turnover indicator reflects the entire set of economic processes: accelerating the growth rate of labor productivity, reducing the capital intensity of production, etc.

The main factors for accelerating the turnover of working capital are: reducing the total duration of the technological cycle; improvement of technology and production organization; improving the conditions for supplying enterprises and marketing products; clear organization of payment and settlement relations.

Money cycle

Cash cycle or working capital cycle(eng. cash conversion cycle, operating cycle) is the period of circulation of funds from the moment of acquiring resources (raw materials, materials, labor) until the moment of selling finished products and receiving money for them. This period reflects the efficiency of working capital management of the organization.

A short cash cycle allows an organization to quickly return funds invested in current assets. The shorter the cycle, the better for the organization. There are even cases when an enterprise has a negative cash cycle indicator. For example, this occurs among enterprises that occupy strong market positions, so they can dictate terms to both buyers (by shortening the payment period for their products) and suppliers (by obtaining a deferred payment from them).

Inventory turnover

Inventory turnover(eng. inventory turnover) - the process of updating and replacing inventories by moving material assets (money invested in them) from the category of inventories into the production and/or sales process. Shows how many times during the analyzed period the organization used the average available inventory balance.

In practice, a situation often arises when managers, fearing a possible shortage of goods, create excess inventories to hedge their bets, and do not think that this leads to unnecessary costs, “freezing” of funds and a reduction in profits.

A competent manager avoids large inventories with low turnover, preferring to free up resources by accelerating the turnover of goods.

Inventory turnover is an important criterion and is subject to careful analysis.

If the resulting ratio is too high (compared to the previous period or to the average), this may indicate insufficient inventory. If the ratio is too low, it may mean that inventory is high or not in demand. For example, a coefficient equal to 3 means that a given product or group of products turns over 3 times during the month.

Inventory turnover characterizes the mobility of funds that an enterprise invests in creating inventories: the faster funds are returned to the enterprise in the form of proceeds from the sale of finished products, the higher the organization’s business activity.

There are no generally accepted standards for turnover indicators; they should be analyzed within one industry and, even better, over time for a specific enterprise. A decrease in inventory turnover ratio may reflect the accumulation of excess inventory, ineffective warehouse management, or the accumulation of unusable materials. But high turnover is not always a positive indicator, since it may indicate depletion of warehouse stocks, which can lead to interruptions in production.

In addition, inventory turnover depends on the marketing policy of the organization. Organizations with high profitability of sales tend to have lower turnover than enterprises with low profitability rates.

Accounts receivable turnover

Accounts receivable turnover(eng. receivable turnover) - measures the speed of repayment of an organization's receivables, how quickly the organization receives payment for goods sold (work, services) from its customers.

The accounts receivable turnover ratio shows how many times during a period (usually a year) an organization received payment from customers in the amount of the average outstanding balance. The indicator measures the effectiveness of working with customers in terms of collecting receivables, and also reflects the organization's policy regarding credit sales.

For accounts receivable turnover, as well as for other turnover indicators, there are no clear standards, since they strongly depend on industry characteristics and the technology of the enterprise. But in any case, the higher the coefficient, i.e. The faster customers pay off their debt, the better for the organization. At the same time, effective activity is not necessarily accompanied by high turnover. For example, when selling on credit, the accounts receivable balance will be high and the turnover ratio will be low.

Accounts payable turnover

Accounts payable turnover(eng. accounts payable turnover) - an indicator that links the amount of money that an organization must return to creditors (mainly suppliers) by a certain date, and the current amount of purchases, or goods and services purchased from creditors. The ratio shows how many times (usually per year) the organization has repaid the average amount of its accounts payable.

A high share of accounts payable reduces the financial stability and solvency of the organization, however, accounts payable to suppliers and contractors allow the enterprise to enjoy “free” money for the duration of its existence.

The benefit of the enterprise in this case is not difficult to calculate: it consists in the difference in the amount of interest on the loan equal to the amount of this debt (if the enterprise took this money from the bank at interest), during the time the debt was on the balance sheet of the enterprise, and the amount of this accounts payable. That is, the profit of an enterprise is how much the bank would have to pay in interest for a loan for providing a given amount for a given period.

If the receivables turnover is higher (that is, the ratio is less) than the accounts payable turnover, then this is a positive factor.

Accounts payable turnover strongly depends on the industry and the scale of the organization’s activities. For creditors, a higher turnover ratio is preferable, while the organization itself is more profitable with a low ratio, which allows it to have the balance of unpaid accounts payable as a free source of financing for its current activities.

Asset turnover (resource productivity)

Asset turnover (resource productivity)(English asset turnover) – allows you to determine the number of capital turnover over a period of time.

The asset turnover ratio allows you to assess the efficiency of using all assets of an enterprise, regardless of the source of their formation. In addition, determining the resource efficiency ratio clearly shows how many rubles of profit the company receives from each ruble invested in assets.

The financial condition of the enterprise, its solvency and liquidity directly depend on the rate of turnover of invested funds.

The most important indicators of asset turnover are the speed and period of turnover. The turnover rate refers to the number of turnovers of the company's capital or its components over an estimated period of time. The turnover period is the average period required to return funds invested in production or commercial operations.

The coefficient characterizes various aspects of activity: from a commercial point of view, it reflects either excess sales or their insufficiency; from financial – the rate of turnover of invested capital; from the economic side - the activity of funds at risk of the investor. If it significantly exceeds the level of sales over invested capital, then this entails an increase in credit resources and the possibility of reaching the limit beyond which creditors begin to participate more actively in the business than the owners of the company. In this case, the ratio of liabilities to equity increases, the risk of creditors increases, and therefore the company may have serious difficulties associated with the inability to pay obligations. On the contrary, a low indicator means the inactivity of part of one's own funds. In this case, the equity capital turnover indicator indicates the need to invest own funds in production.

The financial position of an organization is directly dependent on how quickly funds invested in assets are converted into real money.

However, certain types of assets of an organization have different turnover rates. The duration of funds in circulation is determined by the cumulative influence of a number of multidirectional factors of an external and internal nature. The first should include the scope of the organization’s activity, that is, in most cases, the turnover of funds in small enterprises is much higher than in large ones - this is one of the main advantages of a small business, and a number of other reasons.

The economic situation in the country and the associated business conditions of organizations have no less impact on the turnover of an organization’s assets. Thus, the inflationary processes taking place in the country and the lack of established economic relations with suppliers and buyers in most organizations lead to the forced accumulation of inventories, which significantly slows down the process of funds turnover.

Let's consider the reasons for the change in current assets in DMD SLOT ALLOCATION CJSC in 2010 according to Table 2.7.

Table 2.7. - Reasons for changes in current assets in DMD SLOT ALLOCATION CJSC in 2010 (million rubles)

From the table it follows that an increase in current assets by 7 million rubles. occurred due to an increase in own funds by 7 million rubles. The decrease in working capital was caused by a decrease in accounts payable by 7 million rubles.

The most important part of the analysis of the financial condition of an organization is the study of the turnover indicators of the organization’s current assets, which allows us to characterize the effectiveness of their use. The study and analysis of turnover indicators of current assets is important, since the speed of their turnover is directly dependent on such important indicators as the volume of sales of goods, works, services and the profit received by the organization.

Let's analyze the turnover indicators of current assets at DMD SLOT ALLOCATION CJSC for 2009 - 2010. according to table 2.8.

Table 2.8. - Analysis of the turnover of current assets at DMD SLOT ALLOCATION CJSC for 2009 - 2010.

Current assets turnover ratio:

Kob 2009 = 424: 63 = 6.7 (rpm)

Kob 2010 = 522: 70 = 7.4 (rpm)

Inventory turnover ratio:

Kob 2009 = 424: 61 = 6.9 (rpm)

Kob 2010 = 522: 39 = 13.3 (rpm)

Using turnover ratios, we calculate the duration of one revolution:

current assets:

DD 2009 = 360: 6.7 = 48.6 (days)

DD 2010 = 360: 7.4 = 53.7 (days)

material working capital:

DD 2009 = 360: 6.9 = 52.2 (days)

DD 2010 = 360: 13.3 = 27.1 (days)

Using the data obtained, we will calculate the amount of additionally attracted working capital as a result of a slowdown in their turnover:

additional attraction of current assets:

Δ OK = 2.1 x 0.7 = 1.47 (million rubles)

additional attraction of material working capital by slowing down their turnover:

Δ OK = 2.1 x 5.1 = 10.7 (million rubles)

In 2010, compared to 2009, revenue from the sale of goods, works, and services increased by 23.1% (522 / 424 x 100%) with an increase in current assets by 11.1% (70 / 63 x 100%) and reduction in material working capital by 36.1% (39 / 61 x 100%).

The excess of the growth rate of revenue from the sale of goods, works, and services (23.1%) over the growth rate of current assets (11.1%) led to a decrease in the turnover of current assets. And the decrease in the growth rate of tangible current assets (63.9%) compared to the growth rate of sales proceeds (23.1%) led to a slowdown in the turnover of tangible current assets.

The organization must identify the reasons for the slowdown in the turnover of tangible current assets in order to eliminate these reasons in the next reporting period.

The balance sheet is an important source of complete and reliable information about the financial and economic activities of an organization. However, in order to draw a conclusion about the dynamics of its financial and economic activities, it is necessary to analyze the efficiency of using assets and identify the state of profitability of the organization, since these indicators indicate a change in the efficiency of the organization.

Factors influencing asset turnover. The financial position of an organization is directly dependent on how quickly funds invested in assets turn into real money.

The duration of funds being in circulation is determined by the cumulative influence of a number of multidirectional external and internal factors. External factors include the sphere of activity of the enterprise (production, supply and sales, intermediary, etc.), industry affiliation, and size of the enterprise. The economic situation in the country has a decisive influence on the turnover of an organization’s assets. The severance of economic ties and inflationary processes lead to the accumulation of reserves, which significantly slows down the process of turnover of funds.

Internal factors are the pricing policy of the organization, the formation of the structure of assets, the choice of methodology for valuing inventory.

Asset turnover. In general turnover rate of the organization's assets determined using the formula

K ob.f = Sales revenue / Average assets.

The turnover of current assets is determined by the formula:

To ob.ob.a = Sales revenue / Average value of current assets

The source of information on the amount of revenue is the Profit and Loss Statement (form No. 2).

The average value of assets according to the balance sheet is determined by the formula

(He + Ok) / 2

where He and Ok are the value of assets at the beginning and end of the period, respectively.

After this, the duration of one revolution is determined in

days: 360 / Cob.ob.a

Let us present the calculation of asset turnover in the analyzed organization (Table 2).

The higher the sales volume, the more efficiently the assets are used, the faster they turn over. We can say that all assets “turned around” during the sale 0.65 times, and current assets - 1.798 times.

The duration of turnover of all assets was 554 days, and of current assets - 200 days.

Table 2.

Asset turnover, (thousand rubles)

Accounts receivable turnover. Accounts receivable and inventories are used in the calculations of solvency, liquidity, and net working capital indicators. Depending on how quickly they turn into cash, the financial position of the organization and its solvency are determined.

Since receivables occupy a significant share of current assets, an analysis of its condition is required. High growth rates of accounts receivable for payments for goods, works and services, for bills of exchange received (absent in the example under consideration) may indicate that the organization is actively using the strategy of commodity loans for consumers of its products. By lending to them, she actually shares part of her income with them. At the same time, when an organization’s payments are delayed, it is forced to take out loans to support its business activities, increasing its own accounts payable.

To assess the status of accounts receivable, the following indicators are used:

Turnover

• 1. accounts receivable = Sales revenue / Average accounts receivable, where Average where accounts receivable = (Debit, debt at the beginning of the transfer + Debit, debt at the end of the transfer) / 2
• 2. Receivables repayment period = 360 / Receivables turnover
• 3. The share of accounts receivable in current assets = Accounts receivable / Current assets x 100.
• 4. Share of doubtful accounts receivable = Doubtful accounts receivable / Accounts receivable x 100.

The last indicator characterizes the “quality” of receivables. Its upward trend indicates a decrease in liquidity.

Let's calculate these indicators for our example (Table 3).

Table 2.

Quality of accounts receivable, (thousand rubles)

The share of accounts receivable in current assets has increased, which is typical for Russian organizations at present. The receivables turnover was 6.95 times, or 52 days. The higher this indicator, the faster receivables turn into cash. When analyzing it, it is advisable to consider it in dynamics.

For a more in-depth analysis of the organization’s receivables, it is necessary to additionally request its decoding, indicating information about each debtor, the amount of receivables and the timing of their repayment. At the same time, the main task of the subsequent analysis of receivables is to assess its liquidity, i.e. assessment of the organization's debt repayment.

• * control over the status of settlements with customers for deferred (overdue) debts;
• * expanding the circle of buyers in order to reduce losses from non-payment by one or more large buyers;
• * control over the ratio of receivables and payables (with a significant excess of receivables, a threat to the financial stability of the organization arises);
• * providing discounts to customers for early payment, which partially compensates for losses from inflation.

Inventory turnover. Replenishment of the organization's cash depends on the turnover of inventories. The assessment of inventory turnover is carried out for each type of inventory (inventory, finished goods, goods, etc.). Since production inventories are accounted for at the cost of their procurement (purchase), then to calculate the inventory turnover ratio, not sales proceeds are used, but the cost of products sold. To estimate the rate of inventory turnover, the formula is used

Inventory turnover ratio = Cost of goods sold / Average inventory, where

Average inventory = 9 Inventory balances at the beginning. lane + Remaining stocks at the con. lane) / 2

The shelf life of inventories is determined by the formula

Inventory shelf life = 360 / Inventory turnover.

In the example under consideration, inventories at the beginning of the year amounted to 32,380 thousand rubles, and at the end - 45,840 thousand rubles. Cost of products sold -- 94,640 thousand rubles. (82,360 thousand rubles + 12,280 thousand rubles - form No. 2) Consequently, the inventory turnover was 2.42 times, and the shelf life of inventories was about 149 days. Such an analysis must be carried out over time.

For normal production and sales of products, inventories must be optimal. Having smaller but more mobile inventories means that less of the organization's cash is in inventory. The accumulation of inventories is evidence of a decline in the organization’s activity in production and sales of products.

Let's sort it out index asset turnover. The coefficient belongs to the group of financial indicators “Turnover (business activity)”. The other three groups of financial indicators are “Liquidity”, “Profitability”, “Financial stability”. Liquidity and financial stability ratios show the solvency of the enterprise, and profitability shows its effectiveness. Turnover ratios show the intensity (turnover rate) of using assets or liabilities. They determine how the enterprise actively conducts its activities.

. Economic sense

First, let's define the economic meaning of the coefficient. The asset turnover ratio reflects how the company uses (how intensively) its existing assets. The coefficient determines the efficiency of using own funds (both own and borrowed) in the production and sale of products.

This coefficient should be read as follows. For example, the asset turnover ratio is 4 (the analyzed period is one year). Based on this, we can conclude that the company received revenue for the year (in total) that is 4 times the value of its assets. They say that the company's assets turn over 4 times a year.

The higher the value of this indicator, the more efficiently the enterprise operates. The asset turnover ratio is directly proportional to sales volume (in the formula it has “Revenue” in the numerator). An increase in this ratio indicates that sales have also increased. The lower the turnover, the greater the dependence of the enterprise in financing its production process. The table below shows the reasons for the change in the indicator.

Asset turnover ratio. Synonyms

This coefficient is often called differently in different economic literature. To avoid confusion in its interpretation, we present the most commonly used synonyms for asset turnover:

• Resource efficiency,
• Capital productivity indicator,
• Asset turnover ratio
• Total assets turnover,
• Turnover ratio
• Asset management ratio.

Asset turnover ratio. Calculation formula

The formula for calculating asset turnover is as follows:

According to the balance sheet forms, the indicator is calculated using the formula:

Asset turnover ratio = line 2110/(line 1600ng.+line 1600kg/2)

Ng. – line value 1600 at the beginning of the year.
Kg. – line value 1600 at the end of the year.

Don't forget to also divide by 2 to find the average asset value for the year. The reporting period may not be a year, but a month.

Asset turnover period

The asset turnover ratio can be easily transformed into an indicator asset turnover period. This indicator better reflects the efficiency of using assets and represents the number of days required to convert assets into money supply. Formula for calculating the asset turnover period (one turnover):

Asset turnover period = 360/Asset turnover ratio

Video lesson: “Calculation of key turnover ratios for OJSC Gazprom”

Asset turnover ratio. Calculation using the example of Megafon OJSC

Calculation of asset turnover for OJSC Megafon. Balance

Calculation of asset turnover for OJSC Megafon. Gains and losses report

To calculate the indicator, you need to take balance sheet data from the official website of Megafon OJSC.

Asset turnover ratio 2014-1 = 68316/(449985+466559)/2 = 0.14
Asset turnover ratio 2014-2 = 139153/(466559+458365)/2 = 0.30
Asset turnover ratio 2014-3 = 213539/(458365+413815)/2 = 0.48

Remember to take the average of assets over the period. Therefore, we divided by 2 in the denominator the amount of assets at the beginning of the period and at the end. OJSC Megafon's asset turnover ratio increased. We can conclude that the company increased its sales, since it is sales that directly affect this ratio.

Asset turnover ratio. Standard

The coefficient does not have a specific standard value. It is worth analyzing it, like all turnover indicators: in dynamics. Therefore, if there is a downward trend - inefficient use of assets, and similarly, vice versa, with increasing growth - an increase in the quality of asset management.

In reality, when evaluating enterprises in high-tech and capital-intensive industries, this coefficient has small values. This is due to the fact that companies in such industries have large assets. And the coefficient for turnover in trading enterprises will have greater values, since the intensity of cash turnover in such enterprises is higher.

Comparison of asset turnover indicators (AT) and return on assets (ROA)

Let's define the difference between asset turnover ratio and return on assets (ROA). The ROA formula is given below:

Return on assets ratio = Net profit/Assets = line 2400/line 1600

Working capital turnover is the most important characteristic in assessing the activities of an enterprise. In theory, current assets are the capital invested by a company in its current activities during each operating cycle. Analysis of asset turnover is an integral component of financial analysis. WORKING CAPITAL TURNOVER - characterizes the number of turnovers made by working capital during the reporting period (year) and represents the ratio of the volume of products sold to the working capital standard. The influence of turnover on the financial results and financial condition of the organization. The higher the circulation rate of working capital, the less the need for them and the better they are used. Asset turnover is the best way to assess the real efficiency of an enterprise's operating activities. Thus, adequate turnover indicators make it possible to assess, among other things, the maturity and presence of a long-term development strategy for the company.

Asset turnover ratio is the ratio of revenue from product sales to the entire balance sheet asset total. This indicator characterizes the efficiency of the company’s use of all available resources, regardless of the sources of their formation, i.e. it shows how many times per year (or other reporting period) the full cycle of production and circulation is completed, bringing profit to the company, or how many monetary units of sold products brought each monetary unit of assets. Indicators of turnover of current assets: economic content and calculation methods. To analyze the turnover rate of current assets as a whole, the turnover ratio (Ko) is calculated - the ratio of revenue excluding VAT and excise taxes (B) to the average amount of working capital (OBav) for the period:

Ko = B / OBsr where, OBsr = (OBSn + OBSk)/2, OBSn, OBSk – respectively, the amount of working capital at the beginning and end of the period.

The value of the turnover ratio of all assets shows the efficiency of using current assets; an increase in the indicator over time indicates an increase in the efficiency of using current assets throughout the enterprise. A better idea of ​​the efficiency of asset use is provided by indicators of the asset turnover period, which is the number of days required to convert them into cash and is the reciprocal of the turnover ratio multiplied by the length of the period. To estimate the duration of one turnover in days, the indicator is calculated - the duration of one turnover of working capital using the formula:

To=360 / Ko or To =365 / Ko

The value shows how many days later the funds invested in current assets or their components again take cash form. A decrease in this indicator over time is a positive factor. The values ​​for the components of current assets are calculated similarly.

The turnover ratio and turnover duration are calculated using the formulas: Ko(DZ) = B / DZsrTo(DZ) = DZsr / B * 360 or To(DZ) = 360 / Ko(DZsr)

Where, DZsr is the average amount of receivables for the period.

The cash turnover ratio is calculated using the formula:

Co(DS) = V / DS

The value of the indicator shows how many times during the period the funds in the accounts and in the cash register of the organization made turnovers. The duration of cash turnover is calculated using the formula: To(DS) = 360 / Co(DS)

These indicators are used to evaluate the company's business activity in the use of funds. A decrease in turnover and an increase in the average period of cash turnover indicates an irrational organization of the enterprise’s work, which allows for a slowdown in the use of highly liquid assets, the main purpose of which is to service the production and economic turnover of the enterprise. To assess the level of inventory utilization, the inventory turnover ratio is used, which shows how efficiently the company uses inventory and shows the rate of inventory turnover. The calculation is carried out using the formulas: Co(ZAP) = B / ZAP Duration of inventory turnover taking into account revenue To(ZAP): To(ZAP) = ZAP / B*360 or To(ZAP) = 360 / Co(ZAP) Increasing the value of the indicator in dynamics indicates an improvement in the organization of inventories at the enterprise, an increase in demand for the enterprise’s products, a decrease in overstocking, etc. A reduction in inventory turnover is the basis for a thorough analysis of the organization of production and economic processes, the organization of marketing activities, etc. Factors influencing the turnover of current assets. The duration of funds in the turnover of an enterprise is determined by the combined influence of a number of external and internal factors. To the number external factors should include: the field of activity of the company (production, supply and sales, intermediary, etc.); industry affiliation; enterprise size. The macroeconomic situation has a decisive influence on the turnover of an enterprise's assets. The severance of economic ties and inflationary processes lead to the accumulation of reserves, which significantly slows down the process of turnover of funds. TO factors of internal nature include the pricing policy of the enterprise, the formation of the structure of assets, the choice of methodology for valuing inventory. Ways to accelerate turnover. The duration of one turnover is reduced by reducing inventory, production cycle and delivery time of finished products. Inventory standards are reduced by regulating the consumption rates of raw materials and supplies, replacing scarce raw materials with cheaper ones, using production waste, improving the quality of the material used, increasing the speed of delivery of the material, using reusable containers, and unifying parts and assemblies. As a result of organizational and technical measures, the average daily consumption of material assets and the interval between deliveries and, consequently, the need for working capital are reduced. Reducing the delivery time of finished products is one of the ways to improve the use of working capital in the circulation sector.