All about car tuning

The working capital standard is presented. Standard for working capital in production inventories. Labor resources, personnel and personnel of the enterprise

Standard working capital V production inventories , as well as in work in progress, can be a significant characteristic of the efficiency of the enterprise, as well as a criterion for assessing the quality of work of the company’s management. We will consider in this article what formulas can be used to calculate the corresponding standards.

What are the standards for fixed assets in inventories or work in progress?

Any working capital standard (hereinafter - OS) is a characteristic that reflects the optimal value of fixed assets in the form of enterprise assets (represented by inventories or work in progress), which, on the one hand, is sufficient to maintain a continuous production cycle, on the other hand, is minimal in terms of expenses for the purchase and maintenance of these assets.

In the context of inventories and work in progress, the economic role of the working capital standard will be to determine the required volume of fixed assets based on the objective characteristics of the business model that have developed at a certain point in time (recorded in a certain period).

These characteristics can be presented, for example:

1. For MPZ:

  • cost of assets;
  • dynamics of asset consumption;
  • duration of the asset processing cycle in production;
  • the degree of reliability of supplies of goods (for example, in the context of the duration of possible delays in deliveries, the likelihood of supply interruptions).

2. For work in progress items:

  • the cost of production of finished goods (the production of which at a certain stage forms objects of work in progress);
  • duration production cycle;
  • the ratio of the value of production costs for the production of work in progress objects to the cost of the finished product.

But first of all, let’s determine how these standards can be used in practice from the point of view of enterprise managers making management decisions.

Why may it be necessary to determine the working capital standard in inventories or work in progress?

Both standards of working capital - in inventories and work in progress - are calculated, as a rule, for the period corresponding to the full production cycle. Namely:

  • period as a totality business transactions from the moment the inventories arrive at the workshop until the goods are accepted from this workshop, for the production of which the corresponding inventories were used (if we talk about the standard of working capital in the production inventory);
  • period as a set of business transactions within which, at one or another stage of production of goods, an object of work in progress is formed (if we talk about the OS standard in work in progress).

Both standards can:

1. Be a reference point for assessing the quality of inventory management and work in progress.

If responsible managers allow a decrease in actual indicators for fixed assets in inventories or work in progress, serious difficulties may arise in the operation of the enterprise, including production stoppage.

In turn, an excess of actual indicators over standard indicators may indicate ineffective use cash enterprises.

The fact is that inventories and work in progress are assets that are significantly less liquid than cash. In most cases, inventories are difficult to use to purchase other assets, extremely difficult to pay off liabilities, and almost impossible to purchase securities. From this point of view, having more cash at management's disposal is almost always preferable to having an excess inventory of inventories.

In order to correct the situation, management decisions can be made, mainly of a disciplinary nature, aimed at improving the quality of execution by responsible managers of the requirements for the volume of OS in accordance with the standards.

2. Be a reference point for assessing the effectiveness of the business model.

If it turns out that OS standards in inventories or work in progress are significantly higher than those of individual competing firms or the industry average (with the same volume of output of goods produced by the compared firms), then this may indicate an ineffective enterprise management model.

In order to correct the situation, management decisions can be made aimed at modernizing business processes that affect the value of OS standards in inventories or work in progress. For example, this could be the introduction of new technologies that reduce the cost of goods, the search for new suppliers who deliver materials without interruption, etc.

Let us now consider what formulas will be used to determine the standards for working capital in inventories and work in progress.

How to determine working capital standards for inventories (calculation formula)

The common formula for the working capital standard for industrial inventories has the following structure:

Refinery = SEB × (TEK + STR + TR + TECH),

Refinery - working capital standard for production inventories;

SEB - cost (cost of purchase, release) of production inventory (in rubles);

TEK - the volume of the current stock (in a given unit of measurement - for example, in tons);

STR - volume safety stock;

TR - volume of transport stock;

TECH - volume of technological stock.

The oil refinery indicator is thus expressed in monetary terms.

Each of these components of the formula depends on the specifics of the organization of production at a particular enterprise and can depend on a wide range of factors.

1. The SEB indicator corresponds to the actual cost of a specific inventory, everything is obvious here.

2. The TEK indicator (necessary to ensure a full cycle of uninterrupted production) is calculated using the formula:

TEK = SUT × BP,

SUT is the average volume of consumption of inventory per day;

BP is the duration of the full production cycle in days.

2. The TFR indicator (necessary in case of interruptions in the supply of goods) is calculated using the formula:

0.5 × SUT × RP,

RP is the expected average difference between the planned and actual delivery time of materials.

3. TR indicator (necessary in case of delay of a person on the way vehicle, carrying goods from the supplier) is calculated using a similar formula:

0.5 × SUT × ZTS,

ZTS is the expected average delay of a vehicle from the supplier.

4. The TECH indicator (reflecting the amount of technological losses in production and, as a consequence, the need to replenish the inventories by the corresponding amount) is calculated using the formula:

(TEK + STR + TR) × NORM,

NORM - established standard for technological losses.

Example

The company produces concrete, and for this it uses a type of concrete material such as sand. Let's agree that:

  • the company purchases sand at a price of 2,000 rubles per ton (SEB);
  • the full concrete production cycle is 10 days (BP);
  • the average daily sand consumption is 3 tons (AD);
  • the expected average difference between planned and actual sand supplies is 2 days (DP);
  • the expected average delay of the supplier's vehicle in transit is 1 day (ZTS);
  • The standard for technological sand losses is 2% (NORM).

We calculate the volumes of reserves:

TEK = 3 × 10 = 30 tons;

STR = 0.5 × 3 × 2 = 3 tons;

TR = 0.5 × 3 × 1 = 1.5 tons.

TECH = (30 + 3 + 1.5) × 0.02 = 0.69 tons.

The standard for working capital in production inventories will be:

Refinery = (30 + 3 + 1.5 + 0.69) × 2,000 = 70,380 rubles.

How to determine the standard for work in progress (as a factor in the economic efficiency of an enterprise)

Common formula for working capital standards in work in progress has the following structure:

NP = (NE × SP × SC) / PERIOD,

NP - OS standard for work in progress;

SV is the average duration of the production cycle for the release of goods;

SP - cost of production of this product during the reporting period;

KZ - cost increase coefficient (shows the ratio of the cost of an inventory item to the cost of the finished product);

PERIOD - number of days in reporting period(for which the NP indicator is considered).

The short circuit coefficient can be calculated using the formula:

KZ = (MPZ + 0.5 × CZ) / (MPZ + CZ),

MPZ - costs of raw materials and supplies for the production of goods during the analyzed period;

TsZ - shop costs (for electricity, maintenance of machines and equipment).

Example

The company produces concrete. Let's agree that:

  • the cost of its annual volume is 3,000,000 rubles (SP);
  • reporting period - year, 365 days (PERIOD);
  • the average duration of the production cycle is 10 days (DC);
  • costs for raw materials and materials for concrete - 2,000,000 rubles (MPZ);
  • shop costs - 1,000,000 rubles (CZ).

1. Find the short circuit indicator, which will be:

KZ = (2,000,000 + 0.5 × 1,000,000) / (2,000,000 + 1,000,000) = 0.83.

2. Find the NP indicator, which will be:

NP = (10 × 3,000,000 × 0.83) / 365 = 68,219.18 rubles.

Results

The working capital standard in the inventories, as well as standard of working capital in work in progress are among the key criteria for assessing the effectiveness of an enterprise’s business model. The lower they are, the more efficient production can be considered.

Get acquainted with other significant economic indicators characterizing the efficiency of the enterprise, you can read the following articles:

The standard for working capital in production inventories is 2,200 thousand rubles,

standard for deferred expenses - 500 thousand rubles,

product production plan 6000 pcs.,

production cycle duration - 30 days;

production cost of one product is 36 thousand rubles;

cost increase factor - 0.85;

stock norm finished products in stock - 26 days.

Define:

1. standard working capital in work in progress;

2. standard working capital in finished products;

3. general standard of working capital of the enterprise.

Solution:

1. The standard for working capital in work in progress is determined by the formula:

B is the volume of production in physical terms;

C is the cost of one product;

T pc - duration of the production cycle;

Kn - production growth rate;

D - duration of the planning period.

2. Standard working capital in finished products:

N gp = P × D nz,

P - one-day production at production cost,

D nz - the standard stock of finished products in days.

Let's find one-day output at production cost:

N gp = 600 * 26 = 15,600 thousand rubles.

3. The general working capital standard of an enterprise is the sum of:

Nose. = N pr.z + N np + N gp + N r.b.p.

N pr.z - production reserve standard,

N np - work in progress standard,

N gp - standard stock of finished products,

N r.b.p. - standard of expenses for future periods.

Nose. = 2200 + 15,300 + 15,600 + 500 = 33,600 thousand rubles.

General working capital standard consists of the sum of private standards:

N total = N p.z + N n.p + N g.p + N b.r,

    Np.z - production reserve standard;

    Nn.p - work-in-progress standard;

    Ng.p - finished product standard;

    Nb.r - standard for future expenses.

Inventory standard

The production inventory standard for each type or homogeneous group of materials takes into account the time spent in preparatory, current and safety stocks and can be determined by the formula:

N p.z = Q day (N p.z + N t.3 + N line),

    Q day - average daily consumption of materials;

    N p.z. - norm of preparatory stock, days;

    N t.z. - current stock norm, days;

    N page - safety stock norm, days;

Preparatory stock is associated with the need to receive, unload, sort and store inventory. The time standards required to complete these operations are established for each operation for the average size of delivery based on technological calculations or through timing.

Current stock- the main type of stock necessary for the uninterrupted operation of the enterprise between two next deliveries. The size of the current stock is influenced by the frequency of supplies of materials under contracts and the volume of their consumption in production. The rate of working capital in the current inventory is usually taken in the amount 50% of the average supply cycle, which is due to the supply of materials from several suppliers and at different times.

Technological stock is created in cases where this type raw materials require pre-treatment or aging to give it certain consumer properties. This stock is taken into account if it is not part of the production process. For example, when preparing for the production of certain types of raw materials and materials, time is required for drying, heating, grinding, etc.

Transport stock is created in case of exceeding the terms of cargo turnover compared to the terms of document flow at enterprises located significant distances from suppliers.

Safety stock- the second largest type of reserve, which is created in case of unforeseen deviations in supply and ensures the continuous operation of the enterprise. Safety stock is usually accepted in the amount of 50% of current stock, but may be less than this value depending on the location of suppliers and the likelihood of supply disruptions.

Rationing of work in progress

The value of the working capital standard in work in progress depends on four factors:

    volume and composition of products produced;

    duration of the production cycle;

    production costs;

    the nature of the increase in costs during the production process.

The volume of production directly affects the amount of work in progress: The more products are produced, the larger the work in progress will be.. Changing the composition of manufactured products affects the amount of work in progress in different ways. With an increase in the share of products with a shorter production cycle, the volume of work in progress will decrease, and vice versa.

Cost priceproducts directly affects the size of work in progress. The lower the production costs, the lower the volume of work in progress in monetary terms. An increase in production costs entails an increase in the volume of work in progress.

Note. The text of the problem was taken from the forum.

Determine working capital standards by element and general standard based on the following data:

Indicator name Indicator value
Production program, parts500
Cost of one part, UAH. 107 145
Duration of the production cycle (costs increase evenly), days38
Amount of costs for basic materials as part of the cost of the part, UAH.71 430
Standard stock of basic materials, days19
Consumption of auxiliary materials for annual production, UAH 4 285 800
Standard stock of auxiliary materials, days36
Fuel consumption, UAH. 2 285 760
Fuel reserve rate, days27
Standard for other inventories, UAH. 642 870
Standard stock of finished products, days5

Comment.
It’s interesting that the author of the problem knows that production program Is it daily, shift, weekly, monthly, quarterly and annual, as well as for any period of time that we can think of? From which it follows that production load (as well as working capital standards) will vary significantly! And how to solve this? I would venture to guess that the production program was given to us a year in advance. (I came to this conclusion by comparing the reserve standards given for the year, and the annual program turned out to be close in meaning)

There is also one more nuance - is the standard given in working days or in calendar days? Accordingly, the solution will be different. For simplicity, we select calendar days and assume that the enterprise operates in one shift. We have 365 days in a year.

It is completely unclear what is hidden behind the words “cost of one part”. Is this direct cost? Full cost? Production cost? For the purposes of the solution, we assume that the average actual production cost is taken into account on account 26 “Finished products”.

One more note. It will still not be possible to determine the general working capital standard from the task data, since there is no data on safety stock, loading and unloading standard, etc. But for the holy purpose of "solving the problem" we will ignore all this... I wonder how many businesses will lose their money being run by "specialists" who are trained on such tasks?

Solution.
Let's determine the daily (daily) production program.
500 / 365 = 1.36986 parts per day

Then:
Stock standard for basic materials
19 * 1.36986 * 71,430 = 1,859,132.90 hryvnia

Standard for stock of auxiliary materials
4,285,800 / 365 * 36 = 422,709.04 hryvnia

Fuel and lubricants stock standard
2,285,760 / 365 * 27 = 169,083.62 UAH.

Finished product inventory standard
5 * 107,145 * 1.36986 = 733,868.25 UAH.

Work-in-progress inventory standard
(107 145 - 71 430) * 1,36986 * 38 / 2 = 929 566,45

Having summed up the obtained values, we determine a certain “general standard” that is required to solve the problem. Please take into account that the actual working capital standard will differ from the obtained value.
1,859,132.90 + 422,709.04 + 169,083.62 + 733,868.25 + 929,566.45 = 4,114,360.26 hryvnia

Answer: 4,114,360.26 hryvnia

Task 2. Calculate the working capital ratio

During the year, 1000 products will be manufactured, the cost of one product is 183 UAH. The duration of the manufacturing cycle is 9 days, at the beginning of the cycle 405 UAH are spent. Determine the standard for working capital in work in progress.

Solution.

Knz - coefficient of increase in costs in work in progress.

Knz = (First + 0.5*С) / (First + С)

Under rationing of working capital understands the process of determining the minimum, but sufficient (for the normal course of production process) the amount of working capital at the enterprise. In a planned economy, a higher organization established a general working capital standard for each enterprise. Under these conditions, enterprises were forced to control this value.

With the transition to market conditions for enterprises, no one sets or controls working capital standards. But this does not mean that in market conditions enterprises should not themselves establish and control working capital standards.

In conditions market relations the importance of rationing working capital increases sharply, since ultimately it is related to solvency and financial condition enterprises.

The general standard of working capital (Ntot) consists of the sum of private standards:

where N p.z - production reserve standard;

N n.p - work in progress standard;

N g.p - finished product standard;

N b.r - standard for future expenses.

Inventory standard(refinery) consists of the current stock standard, preparatory stock and insurance stock and can be determined by the formula

where Qcy t is the average daily consumption of materials;

N t.z - current stock norm, yes.;

N p.z - norm of preparatory stock, days;

N page - safety stock norm, days.

Magnitude work in progress standard(Нн.п) can be determined by the formula

where V day is the planned volume of production at production cost;

T c - duration of the production cycle;

Kn.z - cost increase coefficient.

At enterprises with uniform production output, the cost increase coefficient (K„z) can be determined as follows:

where a is the costs incurred at a time at the beginning of the production process;

c - subsequent costs until the end of production of finished products.

Thus, the standard of working capital in work in progress depends on the daily volume of products produced, the duration of the production cycle and the cost increase factor. It characterizes the degree of readiness of the product and is determined by the ratio of the cost of work in progress to the cost of finished products.

Working capital standard in finished product inventories(N g.p) can be determined by the formula

where Vsut is the daily output of finished products at production cost;

Tf.p - time required to form a batch to send finished products to the consumer, days;

T o.d - time required to prepare documents for sending cargo to the consumer, days.

Rationing working capital at an enterprise and monitoring established standards is one of the most important components of enterprise management as a whole. This problem is especially relevant for medium and large enterprises.

See also: