Analysis of the Operation and Financial Condition of the Enterprise

Analysis of the Operation and Financial Condition of the EnterpriseThe increase in work in progress during the final quarter of 2XX9 is related to thecommencement of new projects and continuation of the other projects.It can be concluded that the changes in current assets of the enterprise are closelyrelated to the changes having taken place in work in progress, which, on their turn, arerelated to the cash assets invested in the projects which have neither been transformed intoaccounts payable, nor in cash.The suggestion for the enterprise management would be as follows: larger controlneeds to be exerted over a more timely conversion of the resources invested directly intothe units of construction into accounts receivable or in cash, as well as the statements ofdelivery-acceptance for the projects need to be signed as soon as possible.5.5.3. Accounts receivableUpon analysing the composition of current assets it was found that the largest itemsof current assets are ‘Work in progress’ and ‘Accounts receivable’ according to both theirvalue and the scope of changes. Information on accounts receivable has been summarisedin Table 5.19 ‘Accounts receivable of Enterprise N from 31/03/2XX8 to 31/12/2XX9’.Table 5.19.Accounts receivable of Enterprise N from 31/03/2XX8 to 31/12/2XX9March,2XX8June,2XX8Sept.,2XX8Dec.,2XX8March,2XX9June,2XX9Sept.,2XX9Dec.,2XX9Accountsreceivable 88518 101614 154316 201877 280583 213256 188399 163233Changes inaccountsreceivable byperiod -493 13096 52702 47561 78706-67327-24857-25166Changes inaccountsreceivable byperiod, % -0,6 12,9 34,2 23,6 28,1 -31,6 -13,2 -15,4By looking at the Table 5.19 it can be noticed that the amount of the enterpriseaccounts receivable increased starting with the middle of 2XX8 till the end of March,2XX9. Till the middle of 2XX8 the enterprise was not paying much attention to themanagement of accounts receivable, however, in the middle of 2XX8 there were a few ofdebtors which did not pay for the works performed, resulting in an increased the amount ofaccounts receivable. Beside these debtors the enterprise was affected by some debtorshaving filed for bankruptcy which increased the amount of accounts receivable even more.In October of 2XX9 the enterprise employed an employee whose main task was thecontrol of accounts receivable, some time passed, however, for the employee to understandin detail the processes going on in the building industry and in the meantime the amount ofaccounts receivable increased.During the second quarter of 2XX9 the enterprise management was advised toimplement any large projects involving large periods of payment with the use of servicesof the factoring companies, which was done in April 2XX9. From the perspective of the109