LovesTheTeam.com

Quantitative assessments of business activity of an enterprise

In the financial sense, the business activity of the companymanifested in the turnover of its funds. In this regard, the analysis of business activity and the efficiency of doing business uses the dynamics of indicators (ratios) of turnover. Their importance for the enterprise is determined by a number of reasons. First, the amount of the company's revenue depends on the turnover speed. Secondly, the relative value of fixed costs depends on the turnover size - the higher the revenue, the lower the share of costs. Third, the increase in turnover at one stage, entails its acceleration to another. In general, the solvency and profitability of the company directly depend on how quickly investments in assets turn into real money. There is a whole range of turnover ratios. Among them, we can distinguish coefficients of turnover of assets and equity, fixed assets and inventories, receivables and payables. The ratio of assets turnover (capital) denotes the speed of turnover of the capital of the enterprise or how much money each asset unit brought. It is calculated as the ratio of net proceeds to the average value of assets (the amount of capital). The turnover ratio of current assets shows the ratio of revenue to working capital of the enterprise. If this indicator decreases, it signals a slowdown in the turnover of money. The turnover ratio of receivables is estimated by the ratio of revenue to the average amount of debt. It reflects how many times the funds invested in settlements with consumers turned out. The high value of the indicator indicates a rapid receipt by the company of payment on accounts. The turnover on accounts receivable should be compared with the similar one - on the accounts payable. The last factor reflects the expansion (decrease) of commercial loans that were provided to the company. Its growth means that the rate of payment for purchases by the enterprise is growing, the decrease indicates an increase in acquisitions on credit. The inventory turnover factor reflects the number of turnover of the enterprise's reserves. Its decline indicates an increase in work in progress or a fall in demand for products. The higher the index of inventory turnover, the more stable the financial position of the enterprise. It is calculated as the ratio of the cost of production to the value of the stock. The coefficient of turnover of fixed assets is also called the return on assets. It reflects the ratio of net proceeds to the value of fixed assets. Based on this coefficient, you can judge the effectiveness of the use of fixed assets. Quantitative assessment of business activity can include the analysis of not only relative but also absolute indicators. The latter include, in particular, the volume of capital, sales and profits, as well as their dynamics.

Qualitative assessment of business activity of the enterprise

Business activity evaluation by qualitativecriteria implies the use of non-formalized indicators. Among them - market (volume and growth rates), export potential of products, financial activity, labor market. Include in them the reputation of the company, the number of regular customers, the level of fame. Increasing business activity of the company can manifest itself in expanding the geography of sales, assortment of goods, professional development of enterprise employees, the efficiency of using raw materials. Measures to increase business activity, as a rule, require significant capital expenditures, which pay off only in the long run. These include, for example, reorganization and expansion of production, major repairs, expansion of the commodity nomenclature.