Coefficient of maneuverability

Before talking about what includes the coefficient of maneuverability of equity , it is necessary to clearly understand the concept itself.

So, this is primarily an indicator that indicates how much of the capital is in circulation, thereby forming an idea of how much of the cash can be used in other investments and which is capitalized. At the same time, the maneuverability coefficient should be quite high, this will make it possible to use the enterprise's own funds for certain needs (purchase of raw materials, components, etc.), without being on the verge of bankruptcy.

If this indicator decreases, it means that the enterprise has a slowdown in repayment of accounts receivable, and also conditions for the provision of commodity loans from the side of contractors and suppliers become tougher. Conversely, if it increases, it means that the company's ability to repay current liabilities is increasing, the creditworthiness of the organization is growing.

It is believed that the coefficient of maneuverability indicates the ratio of working capital, which is available to the company to other sources of financing. It is not surprising that this indicator is not constant and unchanged. It can vary and depends on the industry belonging to the enterprise and its structure.

The most successful option is considered when the coefficient of maneuverability of the functioning capital in the dynamics, even slightly, but increases. Such an increase in the coefficient only indicates that the organization functions normally. The fact is that this indicator can increase only if its own working capital increases or additional sources of financing decrease. There is a direct dependence, which, with a sharp increase in this indicator, can automatically cause a decrease in other indicators. For example, the coefficient of financial autonomy will increase sharply and lead to the dependence of the organization on creditors.

It should be said that from the financial point of view this indicator should be as high as possible, then it is better for the enterprise itself, because this means that the organization can freely maneuver in its financial activities and are not afraid to be dependent on them. The optimal one can be considered when the maneuverability factor is 0.5, although in this case some experts tend to even 0.3.

If we talk about the formula by which this indicator can be calculated, then it should include precise data on the profit and expenses of a particular enterprise, so it is better to do this, armed with figures from the accounting department or special program.

In order to find out what will be the optimal maneuverability for the enterprise , it is necessary to compare it with a specific enterprise with other average indices for the given sector.

Do not forget that there are cases when such an indicator can be negative. Then we can safely say that before us is an enterprise that is not able to independently ensure the formation of costs and reserves, which means that the enterprise does not have sufficient capital to form not only non- current assets but also current assets. In this case we are dealing with an insolvent enterprise.

Thus, we see that a detailed study of the activities of the enterprise and its accurate calculation of the maneuverability coefficient makes it possible to understand how promising the enterprise's activity is and whether it leads to complete bankruptcy and a catastrophic reduction of the invested funds.