Analysis of the Operation and Financial Condition of the Enterprise

Analysis of the Operation and Financial Condition of the Enterprisepenalty on violation of the payment terms having accrued as of the date ofissuing the claim.7) If the debt is not paid for also during this period of time, any documents of thecase are passed over to a lawyer who is preparing to file the case with the court.Enterprise N has not until now used the option of offering its customers anydiscounts on early payment of their invoices. Therefore this could be one of the proposalsfor improving their management of accounts receivable, although the enterprise is not in aposition to offer high discounts, due to which it is unlikely that the building contractorswould pick up this option also taking into account that they are short of current assetsthemselves.It is advisable for the improvement of management of accounts receivable to applybefore completion of a project to any agencies operating in the business of trade creditreferences and to ask for a statement on creditworthiness and credit reliability of thetransaction partners by reducing the risk of the amounts of bad debts going up.5.5.4. StockUsually the management of stock plays a great role in large production companies,because stock management is key in ensuring the fulfilment of the programmes, reductionof the prime costs, raising of profit and profitability. Therefore, a timely provision of rawmaterials and component parts for the needs of the enterprise is highly important.According to the data of Table 5.24 ‘Stock and percentage of stock from total currentassets of Enterprise N in the period from 03/12/2XX8 to 31/12/2XX9’ it can be seen thatthe percentage of stock from total current assets is insignificant, the same as their changes.Table 5.24.Stock and percentage of stock from total current assets of Enterprise N in theperiod from 03/12/2XX8 to 31/12/2XX9March2XX8June,2XX8Sept.,2XX8Dec.,2XX8March, 2XX9June,2XX9Sept.,2XX9Dec.,2XX9Stock 347 1491 653 1036 666 3057 4416 1005Changes in stock byperiod 144 1144 -838 383 -370 2391 1359 -3411Total current assets 210557 241778 343779 318301 476754 386462 296149 304415Percentage of stockfrom total currentassets 0,2 0,6 0,2 0,3 0,1 0,8 1,5 0,3By looking at Table 5.24 it can be seen that the highest percentage of stock fromcurrent assets is 1.5% from the total current assets, while the lowest is 0.1% from the totalcurrent assets. This is, because the enterprise had been purchasing materials that weredirectly delivered to the location of realisation or the construction site and only thosematerials that are no longer necessary after the completion of the project are building-up inthe warehouse. Therefore any materials purchased are presented not under the current assetitem ‘stock’, but under the item ‘work in progress’. The project commences with thedesign and the technical specification of the project sent by the building contactor, inwhich all the materials required for the project implementation are stated. Next the projectimplementation estimate is being established, in which the reference prices for materials116