Current assets are the most liquid part of a company's assets. Skillful management of them practically guarantees financial stability and competitiveness. And to do this, they need to be correctly taken into account, normalized and analyzed. How? Find out from the article.

The value of current assets

These are resources that are used no longer than a year or no more than one production cycle and ensure the continuous operation of the company and the production of goods, provision of services, and performance of work.

These resources are always located within the production process, which can be divided into three main sequential steps:

1. Replenishment of raw materials and materials.

2. Manufacturing of goods or performance of work.

3. Delivery and sale of what the company has done to the market, receipt of funds.

Current assets - what they include:

• the organization's cash and cash equivalents;
• short-term receivables;
• raw materials and supplies for the manufacture of final objects of material value;
• semi-finished products at intermediate stages of production site operation;
• products received at the end of the working cycle;
• Future expenses;
• the amount of VAT not accepted for deduction (see also, how to save on VAT when importing goods ).

Picture 1. Composition of current assets

How to develop standards for current assets

Find out how to develop a system of standards for managing current assets of an enterprise and what standardization methods to use.

How are they different from non-current

Non-current assets of the enterprise function for a long time without changes, gradually transferring their value through natural wear and depreciation, if such funds are material. Usually the period of use of funds is more than 12 months.

Non-current include:

• intangible assets, including intellectual property rights, licenses for the right to engage in certain activities, patents for inventions, as well as trademarks, brand and reputation of the company;
• material assets - land and environmental management facilities, buildings and structures, machines and equipment, vehicles, etc.;
• financial investments in other enterprises, as well as investments for which settlement occurs no earlier than in three months;
• property transferred for rent or leasing.

The full list of non-current funds contains the Accounting Regulations “Accounting Statements of an Organization” PBU 4/99, as amended on November 8, 2011.

Current assets turnover ratio

“Turnover” is used for analysis. This parameter shows the efficiency of management and the number of production cycles “money → raw materials → manufacturing → sales” (see Figure 2).

Figure 2.

This parameter does not have any specific standard. For each company, this value is calculated separately each year, and then the indicators are compared over several years, over time. However, all industries have average values ​​for this parameter, which, in principle, can be used as a guide.

If the resulting ratio differs significantly from the industry average, this may indicate that the organization has accumulated too large a volume of such funds and the company is not being run efficiently.

Capital-intensive industries show low turnover. The highest values ​​are in the service sector and trading platforms. However, the trading industry does not have the “processing of raw materials and materials” stage; this is a serious difference from organizations that produce their own goods. It is also affected by profitability: when it is high, turnover decreases, when the rate is low, it increases.

Formula for calculating the current assets turnover ratio (OA):

KO oa = Revenue / OA sg,

where KO oa is the turnover ratio of OA;

Revenue - line 2110 indicator of the financial results statement (profit and loss statement);

OA sg - OA average annual.

Formula for calculating the average annual value of OA:

OA sg = (OA ng + OA kg) / 2,

where OA ng - OA at the beginning of the year;

OA kg - OA at the end of the year.

To calculate turnover, use the following formula:

O oa = 365 / KO oa,

where O oa is the turnover ratio of OA in days.

Rationing of current assets

Managers must understand how much cash, raw materials, materials, etc. are needed to maintain the planned level of production of the product range. The production of goods is carried out according to pre-approved technological processes, with established parameters for fuel consumption, energy and other resources. Each process is carried out according to certain plans with known consumption indicators, so rationing is the basis for determining these volumes.

All components are subject to rationing, including finished products, deferred expenses, raw materials themselves, as well as semi-finished products at all stages of creating finished products.

NOA = Npa + Nnp + Nrbp + Nzgt,

where NOA is the OA standard;
Npr – PR standard;
Nnp – work-in-progress standard;
Nrbp – standard of expenses for future periods;
NZGT – standard stock of finished goods.

The OA standard is calculated in rubles. Standards for production resources, work in progress, and inventory of finished goods are calculated in rubles, in natural units that determine quantity, weight, volume, length, etc. (meters and cubic meters, kilograms, tons), as well as in days.

An important parameter by which inventories are created is time. Each enterprise must know how long it can work between two deliveries of production resources, have safety stocks in case of problems in logistics, and calculate the time for the necessary technological preparation of raw materials.

Formula for calculating the time for which you need to have OA:

NVZa = NZt + NZs + NZp,

where NVZa is the asset stock time standard;
NZt – current stock norm;
NZs – insurance stock norm;
WIP – preparatory stock norm.

Current stock norm depends on the time that passes between two deliveries of productive resources. They can come from the external environment, from suppliers, or be their own semi-finished products at different stages of the work site. Typically, the stock rate should make it possible to load the enterprise for a period that is defined as half the waiting time for re-delivery.

Insurance stock norm is formed to protect the company from violations of the delivery time of necessary raw materials, supplies or semi-finished products by suppliers. To establish the safety stock norm, half of the current stock norm is usually used. Either the maximum period of delivery delay is established empirically and the stock norm for this time is calculated, which subsequently becomes the insurance norm.

Preparatory stock norm is necessary if the supplied raw materials or supplies cannot be immediately put into processing or work orders. This happens in cases where the technical process requires additional training. For example, when it is necessary to normalize temperature and humidity, sort them, assemble them, etc. Thus, the preparatory stock norm depends on the time from the moment raw materials are delivered to the enterprise and before they actually begin to be involved in processing.

Analysis of the organization's current assets

To do this, it is necessary to break down the OA by liquidity level and risks.

Liquidity / risks	Assets
Absolute liquidity, minimal risk	cash; cash equivalents;
Highly liquid, low risk	products in demand; material resources; accounts receivable.
Medium liquid, medium risk	Future expenses; unfinished manufacturing operations; semi-finished products; finished goods.
Illiquid, high risk	overdue accounts receivable; products that have lost demand; material resources that are not used for processing, that have lost their value (defective, spoiled, stale).

The greatest attention should be paid illiquid assets with a high degree of risk. Their increase indicates that investments in business are not providing adequate returns due to the inhibitory effect of this group. To analyze the dynamics of current assets, the ratio of highly liquid and low liquid groups is used.

The next important aspect of the analysis is monitoring the level of resources, double-checking their standards and actual values. Excessively high standards can lead to overstocking, reinsurance and, as a result, the transition of material resources to the category of stale. And this is a direct path to reduced financial stability and unnecessary expenses. Equally dangerous are too low stock levels. In any emergency situation - delivery delays, change of supplier, logistics errors, etc., a lack of stocks of such resources will lead to forced downtime and a decrease in the planned production of goods.

Another important area is control over the production of finished products. They must be produced according to a developed and accepted plan for the production of goods, with a predictable volume of market consumption of products and a predictable volume of payments. Without taking into account these and other components, the company may face the problem of receiving money for finished products.

Non-current assets are...

Non-current assets are property used by a company in business activities for a period exceeding one year. Such property transfers its value to the cost of finished products in parts and is capable of generating income for the organization.

The property (assets) of the organization are divided into current and non-current assets. What these include, as well as how current assets differ from non-current assets, we will tell you in this consultation.

Current and non-current assets

Current and non-current assets are, in simple words, property that is used by an organization and should generate income for it. The difference is how exactly and how much the property is used.

Non-current assets are property that is used in the production process for more than one year and its cost is included in the cost of finished products in parts. Non-current assets include fixed assets, which include buildings, production equipment, transport, etc. (PBU 6/01). In addition, non-current assets include intangible assets (PBU 14/2007), results of research and development, profitable investments in tangible assets, financial investments (PBU 19/02), deferred tax assets and other non-current assets ().

Current assets are property that immediately goes into circulation (that is, is directly used in the production process) and should generate income within a year. The cost of current assets is included in the cost of finished products immediately. Current assets include materials, goods, products, accounts receivable, deposits, cash and other current assets (Order of the Ministry of Finance of Russia dated July 2, 2010 N 66n).

Non-current assets - fixed assets

Non-current assets are the fundamental basis of an organization's production process. The final financial result of the organization depends on how they are formed at the initial stage of creating a company, how they are managed in the future, how their structure changes, and how effectively they are used in the business process.

An increase in non-current assets indicates the acquisition of fixed assets (equipment, buildings, structures) and intangible assets, investments in the construction of new fixed assets or long-term financial investments. A decrease in non-current assets indicates the sale of fixed assets (other non-current assets), the accrual of depreciation (that is, physical wear and tear of production facilities) or the write-off of fixed assets due to their liquidation (the write-off of other non-current assets).

Non-current assets require long-term investments. The need for non-current assets is covered mainly by the organization's own capital and sometimes by borrowed funds. The more non-current assets an organization has, the more financial resources are required to maintain them and, therefore, the greater the share of equity capital should be in the sources of financing the company’s activities.

Current assets arethose enterprise resources without which the activities of any company are virtually impossible. What are current assets, how to calculate and group them in accounting and management accounting, find out in the material.

What refers to the current assets of an enterprise - definition

Enterprise assets are an important indicator that reflects the level of development of the company. There are 2 groups of assets: current and non-current.

• Non-current assets are those company resources whose service life exceeds 1 year: fixed assets, long-term financial liabilities, construction in progress, etc.
• Current assets (OA) are company assets that are consumed during one production cycle or written off during the year.

What are the sources of formation of the organization’s current assets?

The sources of OA formation can be:

1. The company's own or equivalent resources.
2. Involved funds.
3. Borrowed funds.

At the same time, spending the company’s own resources to increase the operating capital has a minimal level of risk compared to attracting borrowed funds.

Let's look at the diagram to see what the company's current assets are.

What is included in other current assets on the balance sheet

According to the norms of PBU 4/99, OA are displayed in section II of the balance sheet.

The balance sheet should also display information about non-material assets that are not included in other articles of Section II. TO other things current assets include:

1. The cost of completed stages of unfinished work, recorded in the account. 46.
2. VAT on advances, allocated separately to the account. 62 or 76.
3. Shortages or damaged valuables for which a decision on write-off has not yet been made.
4. VAT and excise taxes subject to reimbursement after the reporting period.
5. VAT on goods shipped, revenue for which will be recognized in the next year.

This information is displayed in line 1260 “Other current assets”.

What can be classified as low-liquid current assets?

Liquidity is an indicator of the speed at which an asset is converted into money. A very important aspect in making a company profit is the competent management and control of OA. To carry out the control functions of the company and determine risks, it is necessary to develop a gradation that will allow determining the possible liquidity of the asset in the event of a crisis situation. In the economic literature, a variant of risk gradation by degree has been proposed.

Low-liquid assets are considered to be those assets whose conversion into money takes more than a year. For example, a receivable with an expected return period of more than 12 months or goods stored in warehouses. That is, all OA that are considered high risk are considered the least liquid.

Formula for calculating the liquidity ratio of current assets

To calculate the rate of asset turnover and quickly track the solvency of the company, financiers calculate the current liquidity ratio of the company. This indicator shows whether the company can pay off current obligations at the expense of OA. Accordingly, the higher it is, the better for the company. Formula for calculation:

Ktl = OA/Co,

Ktl - current liquidity ratio,

OA - current assets,

Co - short-term liabilities.

The data for calculating the coefficient is taken from the balance sheet.

Results

Effective management of current assets is the key to the smooth operation of the company. Each company determines the volume of OA required for work independently based on its own needs, the rate of resource consumption and the size of the business. At the same time, their lack can lead to a stoppage of production or the inability to pay off current obligations. Excess indicates inactivity of assets and the inability to quickly convert them into cash, i.e. low liquidity.

What is the difference between non-current and current assets? The answer to this question can be given by any accountant from the height of his professionalism, but we will try to look at the question through the eyes of a simple layman.

To work even in the smallest production, you need to know what the profit is made up of and what the costs are, especially if you are a financially responsible person.

People commit many administrative, disciplinary and even criminal acts out of ignorance of the internal “kitchen” of production (and those who do because of knowledge do so intentionally, but that’s not the point).

Be that as it may, understanding assets is useful for any person, not necessarily an accountant and not necessarily a production employee.

Fixed assets

Non-current assets of an enterprise are fixed assets- everything that is not directly involved in the production process, but without which its progress is impossible. For example, a building in which many production workshops are located. Hands do not grow out of the walls and begin to help the workers, but if there were no building, there would be no production either!

It happens, of course, that some material is produced outdoors, but this is the exception rather than the rule. In all other cases, real estate is the basis of production, its foundation.

Buildings and constructions- This is not the active part of non-current assets. Simply put, they are quite stable and are little subject to reorganization. The maximum that is provided for them is planned repairs, and reconstruction, if production plans require it.

Unlike buildings and structures, non-current assets such as machines, units, equipment, technical accessories and engineering devices, are an active share of non-current assets. The equipment fleet of the growing enterprise is constantly updated, more and more powerful units are supplied from abroad, and old ones are repaired, reconstructed and modernized whenever possible.

It is easier to imagine how these non-current assets take part in the production process, but still, they remain in their original form, without sacrificing their screws and tongues for the sake of the final result. However, both buildings and units experience physical wear and tear. This is precisely the strength they put into the product.

Non-current assets are constantly subject to revaluation, since their value decreases due to wear and tear, and the cost of products, accordingly, increases (everything comes from somewhere and goes somewhere: the “law of conservation of value”).

This phenomenon is called depreciation of fixed assets and, as you probably already guessed, it can only apply to non-current assets.

So once again, what applies to non-current assets:

• Buildings, structures, production facilities, workshops, warehouses, etc.;
• Machines, units, power plants, machine tools, transport, equipment fleet as a whole;
• Also non-current assets are long-term, reflected in the enterprise’s credit account;
• This also includes unfinished buildings and structures;
• Animals and perennial plantings;
• As well as other (intangible) assets that represent intellectual value.
  To put it simply, this is knowledge and skills, and in business language this can include various patents and know-how (new items in engineering and technology, the implementation and sale of which the company has the exclusive right to).

This is all that serves a person for several years, right up to “writing off”.

Since non-current assets “live” a long life, it is difficult to call them liquid. In other words , fixed asset turnover, that is, turning them into money, if necessary, leaves much to be desired.

Some assets “lie” on the company’s balance sheet as a dead weight, and sometimes no one is even in a hurry to write them off. Due to such costs caused by the very essence of non-current assets, the company’s balance sheet is maintained in Russian rubles.

If there are no such problems: the equipment fleet has been updated, the newly built buildings sparkle with the brilliance of newness, and there is nothing “lying around” in the warehouses, then most likely the enterprise operates according to standards close to European ones, and it is in its interests that the liquidity of all its assets was high. Then reporting can also be done in currency: depending on which country the company has the best relations with, it can be the euro or the dollar. All you need to do is monitor exchange rates and place the greatest emphasis on the liquidity of non-current assets.

Current assets

Their name speaks for itself: they are completely “turned around” in one (maximum two) production cycle.

The simplest example of current assets is this is all the materials, going to the assembly line: their life is short. Production, supply, (storage), processing. Current assets are not involved in any other production cycle. Perhaps they will be used for fertilizer or some other process not related to production.

The volume of current assets on the company's balance sheet is, one might think, impressive. To ensure that the conveyors operate without stopping and the work process is not interrupted, there is always a supply of materials in the warehouses. However, there are also current assets that serve the production process for at least a year.

What are current assets:

• materials are the main current asset;
• Of course, cash is the most liquid commodity;
• funds in accounts receivable (what third-party companies and organizations owe to this);
• goods already produced and stored in warehouses;
• goods already produced and delivered to the customer, but not yet paid for (when he pays for them, it will be in cash);
• Services already provided but not yet paid for.

Non-current assets are shown in the 1st section of the balance sheet, and current assets in the 2nd section of the balance sheet; together they constitute the Balance Sheet Asset.

Current assets are also presented in a number of accounting accounts. This is a very structured system that makes it convenient to track the movement of tangible and intangible assets.

Assets are the resources that an organization uses for its activities. They are very diverse and can be divided into groups according to many characteristics. One of the main ways of such grouping is to divide assets into current and non-current. Let's consider how current assets differ from non-current assets.

Structure of current and non-current assets

Let's start looking at the difference between current assets and non-current assets with their structure. After all, it is precisely from the material (or intangible) nature of assets that those properties flow that allow them to be classified into one group or another.

Main types of non-current assets:

1. Fixed assets and capital investments.
2. Intangible assets.
3. Long-term financial investments.

Current assets include:

1. Material inventories (raw materials, finished products, goods).
2. Accounts receivable.
3. Short-term financial investments.
4. Money and its equivalents.

The difference between current assets and non-current assets

Term of use. For non-current assets it is usually greater than for current assets. Specific periods depend on the type of assets and the specifics of the enterprise’s activities. The conditional “border” separating these groups of assets can be considered a period of use of 12 months. This period is specified in clause 4 of PBU 6/01 “Accounting for fixed assets”.

1. Expense in the course of activity. Current assets are usually fully used within one production cycle. If these are inventories, then they are physically consumed during the production process. If we are talking about short-term debt, then it is collected, and the money received is also used to cover current expenses. Non-current assets are involved in several production cycles and are used for at least 12 months.
2. Depreciation. This point follows from the previous one. Participating in several cycles, non-current assets gradually lose their value and transfer it to products (goods) through the depreciation mechanism. The concept of depreciation does not apply to current assets.
3. Liquidity, i.e. the opportunity for the owner to quickly sell this asset. In general, the liquidity of non-current assets is lower, i.e. Simply put, they are harder to sell. Although in terms of financial investments, liquidity depends not on the term, but on their object and the current situation on the market.
4. Purchase methods. Non-current assets are usually quite expensive objects, so they are acquired, as a rule, through investments from owners or credit resources. Current assets are purchased at the expense of current proceeds from the sale of products (goods). Although, when expanding activities or a temporary lack of resources, it is possible to use lending to purchase working capital.

Conclusion

One of the main criteria for dividing the assets of an enterprise is their breakdown into current and non-current. The difference between current assets and non-current assets is due to the different characteristics of these types of resources - from the method of acquisition to the order of expenditure and write-off as expenses.