It was then that the rupture of traditional ties between producers in different regions.

It was then that the rupture of traditional ties between producers in different regions.

In foreign economic literature, some authors define working capital as current assets less current liabilities. In this way the definition of working capital is given.

In general, the concept of "capital" comes in three forms: monetary, productive and commodity. The broadest, general concept of capital corresponds to its monetary form. In economic theory, "money capital" is seen as a value form of all capital, and not just as a certain amount of money, which is directed in the process of economic and entrepreneurial activity to acquire means of production and objects of labor.

Working capital goes through three stages of the cycle: money, production and commodity. At the first stage, during the advance of funds, the necessary production stocks are acquired and accumulated.

In the production process, the cost of creating products is advanced: in the amount of the cost of used inventories, the transferred value of fixed assets, labor costs (wages and associated costs). The production stage of the working capital cycle ends with the release of finished products, followed by the stage of sale.

In the third stage, the advance of funds continues until the commodity form of value is converted into money. Receipt of sales revenue indicates the usefulness of the value created by society and the reproduction of advanced funds in it. The monetary form, which gains working capital in the third stage of the cycle, is also the initial stage of the next turnover of capital.

The circulation of working capital and the creation of new value is as follows:

G – T … V … T’- G ‘,

where G – funds advanced; T – objects of labor (goods); B – production; T ‘- finished products (goods); G ‘- funds received from the sale of products.

The purpose of the functioning of capital will be achieved when G ‘= G + ΔG, ie when there is an increase in money compared to the advanced amount. Thus, the self-growth of capital occurs in the process of working capital, which goes through different stages and takes different forms. The less time working capital is in one form or another (monetary, production, commodity), the higher the efficiency of its use, and vice versa. Working capital participates in the creation of new value not directly, but through working capital.

The composition and placement of working capital depend on the area in which it operates: production, trade and intermediation, services (including financial).

In the production sphere, working capital (working capital) is advanced to working capital and working capital.

Production assets include: raw materials, basic and auxiliary materials, semi-finished products, fuel, packaging, spare parts for repairs, low-value and perishable items, work in progress, semi-finished products of its own manufacture, future expenses.

Working capital is the balance of finished products in the warehouse of enterprises, goods shipped but not paid by buyers, balances of enterprises on the current account in the bank, cash, in settlements, in receivables, as well as enclosed in short-term securities …

Thus, working capital (working capital) – is the funds advanced to working capital and working capital to ensure the continuity of the production process, sales and profits,

The ratio of working capital in the sphere of production and circulation is different in different sectors of the economy. This is due to the peculiarities of the organization of production, supply, marketing, as well as the payment system. To ensure the continuity of the process of production and sale of products, it is necessary to achieve the optimal ratio of working capital in the field of production and circulation.

At the same time, the company is interested in reducing working capital in the field of circulation by improving the supply system, more rational forms of payment. In general, in the national economy of Ukraine tangible working capital in 1999 (first half) was 21.5%, working capital – 74.7%, in industry, respectively – 29.9% and 67.9% (Annex 2).

The composition of working capital – is a set of individual elements of working capital and working capital. The composition of working capital in different sectors of the economy may have certain features. Thus, in the manufacturing sector, the main items of working capital are raw materials, basic materials, work in progress, and finished products. In some industries there are items of working capital that are unique to them. For example, in the metallurgical industry, working capital takes into account variable equipment, and in extractive industries, the costs of future periods include the cost of mining and preparatory work.

The structure of working capital is the share of the value of individual items of working capital and working capital in the total amount of working capital. The structure of working capital has significant fluctuations in some sectors of the economy. It depends on the composition and structure of production costs, the conditions of supply of material values, the conditions of sale of products (work performed, services rendered), calculations.

If we consider the structure of working capital in certain industries, it should be noted that in the coal industry, as already mentioned, a significant share is occupied by the costs of future periods. This is due to the relatively high preparatory costs that precede the extraction of minerals (planning future developments, excavation, mine development and others).

In the light and food industries a characteristic feature is the significant material consumption of products. Thus, the share of working capital in stocks of raw materials and basic materials is high.

Mechanical engineering and metalworking are characterized by significant complexity, complexity of production processes, significant duration of production. In this area, a high share of working capital advanced to work in progress.

In the petrochemical industry, the share of working capital invested in shipped goods is high. This is due to the fact that the technological processes in this area are short and a significant part of the manufactured product is on its writes your lab report for you way to the consumer.

Changes in economic management have significantly affected the structure of working capital of industrial and non-industrial enterprises of Ukraine.

An increase in the share of receivables allegedly indicates an improvement in sales, accelerating the turnover of working capital. But this is happening against the background of reduced inventories, ie against the background of reduced production.

The decrease in cash balances indicates not so much the high level of cash flow management in enterprises, but the acute deficit of these funds due to inflation, the crisis of defaults, imperfect tax policy.

The largest decrease in the share of working capital occurred in 1993. It was in this year that inflation reached its peak.

The largest reduction in the share of working capital in inventories occurred in 1992. It was then that the rupture of traditional ties between producers in different regions.

The peak growth of the share of shipped products was in 1992, and receivables – in 1997. This indicates the difficult situation in which companies found themselves. Due to the spread of the crisis of non-payment, enterprises did not have sufficient funds to purchase tangible assets, the prices of which increased significantly.

These data show that the state and use of working capital of an individual enterprise depends on the state of the economy as a whole. In turn, the state of the state economy depends on the state and use of working capital of an individual enterprise.

Classification and principles of working capital

Working capital of enterprises is classified on three grounds:

depending on their participation in the circulation of funds; according to planning methods, principles of organization and regulation; by sources of formation.

According to the first feature, working capital is divided into working capital advanced to working capital and working capital advanced to working capital.

This distribution of working capital is due to the presence in the circulation of funds of two independent areas – the sphere of production and the sphere of circulation. The greater the share of working capital placed in production, the more efficient use of working capital.

Depending on the planning methods, working capital is divided into normalized and non-normalized.

The need to divide working capital into normalized and non-normalized follows from the economic feasibility of achieving the best results at the lowest cost. Establishment of standards for individual items of working capital allows to ensure the continuous operation of the enterprise under the condition of optimal production stocks, the size of work in progress, the balance of finished products.

Normalized working capital includes working capital in inventories, work in progress and future expenses, in the balances of finished products in warehouses.

Non-standard working capital includes working capital except for finished goods in stock.

According to the sources of working capital are divided into:

own and equated to own; involved; others.

The classification of working capital is important because it allows the company to determine the optimal composition and structure, needs and sources of working capital. The financial condition of the enterprise largely depends on it.

The system of working capital is built on certain principles:

First, giving companies independence in the management, management of working capital. This means operational independence in the use of working capital. Secondly, the definition of planned needs and the placement of working capital by individual elements and units. This means the calculation of the optimal need for working capital, which would ensure the continuity of the production process, the implementation of planned tasks for rhythmic work (development of long-term standards and annual standards). Third, the adjustment of calculated and current standards taking into account the changing requirements of management: production volumes, prices for raw materials and supplies; suppliers and consumers; forms of applied calculations.