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Abstract on the topic of graduation work

Content

Introduction

The formation of production relations determines the development of economic processes at all stages of the reproduction of the social product. Economic relations that characterize any aspect of social life form an economic category. The basis of the economic category is understood as the working resources of the enterprise, which have a distinctive purpose and manifestations of special production relations. Taking into account the high intensity of business operations and, accordingly, the increased risk of their commission, a large number of developing companies and enterprises set themselves the task of determining the exact volume of working capital in order to increase the validity of making tactical and strategic management decisions.

To ensure an adequate situation for the management of working capital, it is necessary to develop, improve and implement measures that help reduce the material consumption of products and accelerate the turnover of working resources. Ultimately, it is important to know that with a high level of turnover of circulating assets, their release subsequently occurs, which in general has a positive effect on the economic activity of the enterprise.

1. Relevance of the topic

The relevance of this topic of the final qualification work is due to the need to ensure financial stability and the efficiency of the enterprise, which directly depend on the volume of working capital, their structure, quality and level of efficiency of use. In modern realities, one of the main problems of most enterprises in various fields of activity is the shortage of cash resources caused by the rapid growth of accounts receivable or an unjustified increase in stocks of raw materials and finished products. All this confirms the need for increased attention to the problem of working capital management at all levels of production.

2. The purpose and objectives of the study

The main purpose of this work is to analyze the theoretical foundations, methodological approaches and tools for managing working capital for the development of practical recommendations for improving the management of working capital of the enterprise. In accordance with the purpose of the study, the following tasks were set:

Object of study: the process of improving the management of the company's working capital

Subject of study: scientific and theoretical foundations and methods of decision-making to improve the management of the company's working capital to improve the efficiency of industrial enterprises.

The scientific novelty of the results obtained lies in the improvement of scientific and theoretical approaches to the development of organizational and economic methods for managing circulating resources.

Approbation of the work results: The main research is given in the works: IV Scientific and practical conference “Resource saving. Efficiency. Development" (Donetsk, DonNTU, 2018), V Republican scientific-practical conference "Resource saving. Efficiency. Development" (Donetsk, DonNTU, 2020).

3. Theoretical foundations and aspects of the working capital of the enterprise

Working capital is part of the resource potential of the enterprise, the purpose of which is to ensure a constant and planned process of the organization's production activities. One-time consumed and reproducible due to advance payments of monetary resources. As a result of the effective functioning of circulating assets, the ability to form economic benefits and the implementation of the goal of the enterprise's activities appears.

Based on the studies of the classics and modern economists, it is possible to give several definitions to circulating resources, but the main meaning of the interpretations is in the following two:p>

  1. Working capital are resources used in the production process, capable of transferring their value to the product being produced during certain production periods. This definition reveals the economic meaning and the concept of "working capital".
  2. Working capital is the amount of money, the advance of which is aimed at creating and using circulating production assets and circulation funds, the purpose of which is to ensure the constancy of the production of goods and, subsequently, to sell it to the consumer. This definition contains the financial meaning of circulating assets and the main motives for their use.

The composition and placement of working capital are shown in Figure 1 [1]:

Composition and placement of working capital

Figure 1 - Composition and placement of working capital

The economic essence of circulating assets is determined by their role in ensuring the continuity of the reproduction process, during which circulating funds and circulation funds pass through the sphere of production and the sphere of circulation. Being in constant motion, circulating assets make a continuous circuit, which is reflected in the constant renewal of the production process.

The classical form of the movement of working capital is shown in Figure 2 [2]:

Stages of the circulation of working capital

Figure 2 - Stages of the circulation of working capital

The capital invested in production, being working capital, begins its journey with a certain amount of money advanced for the purchase of inventories: raw materials, energy, spare parts and other items of labor, which are subsequently used in the production of certain products [6].

So, in order to determine the essence of the enterprise's circulating resources, it is important to know that their value is advanced into the created stocks of production assets and circulation funds. Therefore, when planning and accounting on the balances of material circulating assets, only in the amount of money advanced in them, the size of the state's national wealth is deliberately reduced by an amount equal to the difference in the cost of finished products and shipped goods and their cost. In addition, the amount of this difference reduces the amount of mismanagement losses allowed by individual enterprises in connection with damage to finished products, shortages and theft.

4. Methods of managing the working capital of the enterprise

Rational management of the working capital of an industrial enterprise ensures a rhythmic process of high quality production, timely execution of orders and profit, which, in turn, affects the material well-being of shareholders and members of the enterprise's labor collective and contributes to the growth of the well-being of society.

To form a strategic plan for managing working capital, they are most often guided by the problems of the enterprise identified in the process of analysis. Therefore, as a rule, they are guided by a number of restrictions and try to use certain criteria [3]:

  1. Lack of funds for production activities, in case of unforeseen expenses and potentially effective capital investments.
  2. Lack of own credit facilities associated with the growth of accounts receivable.
  3. Insufficient or excessive inventories to fulfill all contracts are associated with the risk of additional costs or production interruption.
  4. A large volume of working capital in an illiquid form increases inventory costs and reduces revenues.
  5. A high level of accounts payable, especially those types that have short maturities, which form cash gaps.
  6. An irrational combination of short-term and long-term sources of debt capital, etc.

The process of making strategic decisions in the field of working capital management is shown in Figure 3:

Stages of making strategic decisions in the field of enterprise working capital management

Figure 3 - Stages of strategic decision-making in the field of enterprise working capital management
(animation: 8 frames, 12 repetition cycles, 69.6 kilobytes)

Working capital management paths should be logically justified to ensure the quality and effectiveness of management decision changes. Successful work in working capital management requires a willingness to make difficult and trade-off decisions when choosing between multiple conflicting options [4].

5. Methodical recommendations for improving the management of the company's working capital

Increasing the efficiency of using working capital is a particularly urgent task, the solution of which is definitely an important condition for increasing the sales of an enterprise. The development and application of the latest forms and methods of managing material and financial flows, adequate to the conditions of a particular market, the situation in the economy and forecasts of its development, has a particularly significant impact. The main link is the introduction into production practice of modern means of mutual settlements, in which it becomes possible to accelerate the turnover of working resources and free up most of the funds [5, с.122].

Measures that contribute to improving the efficiency of research on working capital include:

  1. The development of the process of combining production at the enterprise, which is one of the directions for improving the use of the potential and all resources of the enterprise, increasing the output of products, reducing its cost and increasing profits at the enterprise.
  2. Reducing the duration of the production cycle based on the introduction of advanced technologies, improving the existing ones, switching to continuous production processes, and intensifying production.
  3. Rationalization of relationships with suppliers and consumers using modern logistics, which will minimize production inventories and product balances in the warehouse.
  4. Improvement of the forms of organization of production based on the optimization of the level of concentration and specialization.
  5. Introduction of continuous monitoring of the state of stocks and receivables, timely identifying and eliminating negative trends.
  6. Large-scale use of the achievements of scientific and technological progress in production.
  7. A set of measures for economic, including material incentives to increase the efficiency of the use of working capital and working capital.

Conclusions

Working capital represents one of the main economic categories, occupies a central place in the implementation of the production and financial activities of the enterprise, the main task of which is the rational and economically beneficial use of working capital in the production process. In this regard, one of the main tasks of the enterprise is to analyze the existing problems that determine the degree of efficiency of using the working capital of the enterprise. It is thanks to circulating assets that the movement of resources, their value, acceleration or deceleration of the cycle of circulation occurs, regardless of the forms of ownership, their scale and the specifics of production.

So, the choice of a policy for the use of working capital in order to achieve a high economic result, to increase the main indicators characterizing the level of profitability and liquidity of an enterprise depends on the situation in the market, the specifics of the activity and on the level of competitiveness of the enterprise. In certain market segments, as well as depending on how the enterprise is developing: it is in relative stability or in stagnation, it is necessary to apply various approaches and appropriate methods for substantiating volumes, improving the composition and structure, optimizing the use of working resources to increase the efficiency of their use.

List of sources

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