Analysis of the Operation and Financial Condition of the Enterprise

Analysis of the Operation and Financial Condition of the EnterpriseTable 5.22.Composition of the Enterprise N accounts receivable in percent in the periodfrom 13/12/2XX8 to 31/12/2XX9Dec.,2XX8March,2XX9June,2XX9Sept.,2XX9Dec.,2XX9Accounts receivable 100,0 100,0 100,0 100,0 100,0Accounts payable, which are not yet due 39,9 54,5 28,8 19,6 31,8Accounts receivable overdue for up to 30days 5,8 5,5 9,2 9,0 7,1Accounts receivable overdue for up to 120days 13,4 10,2 19,7 9,0 5,6Accounts receivable overdue for more than120 days 40,9 29,8 42,3 62,4 55,5It can be seen according to Tables 5.21 and 5.22 that the largest amount of accountsreceivable in the period from the end of 2XX8 to the end of March, 2XX9, is made up ofthe direct accounts receivable, for which the term is not yet due, because at that time amajor project has been implemented by the enterprise and there were no particularproblems with the payment for the works performed. After the most active part in theimplementation of this project was over, the amount of those accounts receivable whichwere not yet due, reduced by one half, while the amount of those accounts receivableoverdue for more than 120 days was gradually increased. This amount is mainly consists ofthe most recent project realisation invoices for the works performed as the buildingcontractors did not pay in due time. When the invoices are not paid by debtors, theyacquire the current assets of another enterprise at their disposal, which they use for theirown needs until the court decision is passed. The period of time before a court ruling ispresented may reach more than a year, therefore, some debtors, unfortunately, choose notto pay for the final works performed, to use the current assets of another enterprise formore than one year and when there is a strong probability that the court ruling could bepresented in a short time, try to agree on a settlement.It is on account of a settlement that in Quarter 4 of 2XX9 the amount of accountsreceivable overdue for more than 120 days was reduced. It can be seen from Tables 5.21and 5.22 that the percentage of accounts receivable from total current assets has beenreduced from 40.9 to 29.8 percent, and this is not, however, on the account of the decreasein accounts receivable overdue for more than 120 days, but on the account of an increase inthe total amount of accounts receivable, because the total amount of accounts receivablehas increased by almost 80 thousand CU as of March, 2XX9.Upon analysing the composition of accounts receivable it can be concluded thatsuch a high percentage of accounts receivable from total assets is not positive, because 40to 60 percent on average from total accounts receivable are made up particularly ofdoubtful debts, in which more than 90 thous. CU are suspended. A recommendation shouldbe given to the enterprise to develop a set of criteria, on what conditions and after whatperiod of time overdue for payment of a debtor’s debt the enterprise must prepare all thedocuments necessary for submission to the court.113