Barbara Janczewska
Changes in Functioning of Movable
Property in the Process of
Transformation of Economy
Annales Universitatis Mariae Curie-Skłodowska. Sectio H, Oeconomia 28, 71-77
U N I V E R S I T A T I S M A R I A E C U R I E - S K L O D O W S K A L U B L I N — P O L O N I A
VOL. X X V III, 6 SECTIO H 1994
Z a k ł a d E k o n o m i k i P r z e m y s ł u W y d z i a łu E k o n o m ic z n e g o U M C S
B a r b a r a J A N C Z E W S K A
Changes in Functioning of Movable Property in the Process of Transformation of Economy
Z m iany w fu n k cjo n o w a n iu m ajątk u o b rotow ego w procesie tran sform acji gosp od ark i
THE E SSEN C E OF M O V A BLE PR O PE R TY
Up till now, m ovable p ro p erty w as tre a te d by productive enterprises as p ro p e rty p lay in g insignificant role in th e ir economies. Functioning of m ovable p ro p erty w as n o t related to long-term activ ity of a firm resulting from th e ru le of accepted developm ent strategy.
A t present, c u rre n t financial decisions w hich c o n trib u te to m anaging of m ovable p ro p e rty are a ttrib u te d to by not lesser m ean ing th a n to in vestm ents. In p ractice, th e m ovable p ro p e rty begins to p lay an increasing role in functioning of every enterp rise. The dignity of m ovable p ro p erty increased in a special w ay in Poland due to s ta rte d process of m aking m ark e t economy.
The tran sfo rm atio n of m aterial sphere, p a rticu la rly industry, in to m ark e t econom y is th a t n u m b e r of various and ind epen den t — according to a form — as w ell as com petitioning econom y su b jects arise. A ratio n al activity of en terp rises d u rin g im m ediate period req u ires to w ork o u t th e fin al m odel of econom y m echanism functioning. N onetheless, it is im p o rta n t to estim ate th e ways, stages and tim e (even approxim ate) of approaching to accepted model.
The process of in itia tin g of m a rk e t m echanism in P oland is c h a ra c te r ized by slow er th a n fo rm er goevrn m en ts th o u g h t, changes in p ro p erty , organization and b ran ch s tru c tu re of economy, especially in state-ow ned productive subjects. Sim ilarly, low results w ere achieved in a field of m anaging effectiveness im provem ent, econom y anim ation, sligh tly higher, inflation control.
72 B arbara J a n czew sk a
In an economic process m ade in every productive firm , the suitable p ro p erty , reg ard ing th e sort, level and stru c tu re , m u st be com m itted. T he e n te rp rise ’s pro p erty divides into d urab le and m ovable. The difference betw een these kinds of p ro p erty results from th e ir economic application, not from th e ir m aterial attrib u tes. Only in m ovable p ro p erty functioning, such significant changes app eared th a t th ey w ere ad m itte d to be in tro duced.
The characteristics of m ovable p ro p erty — in opposition to d u rab le — are th e following: a rep eated change of m a te ria l shape d u rin g prod u ction process, a single taking p a rt in p roduction cycle, a fu ll p a rticip a tio n in prim e costs and necessity of rev iv al a fte r each economic process.
The economic process consisting of p roductive and circulation sph ere can be divided into phases. A phase of su p p ly in g th e circu lation sp here consists of buying of m aterial m ovable m eans th a t are necessary lab o u r things. A phase of selling th e circulatio n sp h ere is characterized by selling processes of fin a lly m ade stu ffs having purpo se as an in stru m e n ta l or consum ption capital.
In each phase and o p eratio n of p ro d uctio n sp h ere th ere is also m ovable p ro p erty as non-finished production on d iffe re n t level of tra n s form ation and readiness to sale. P roductive and circulation spheres are, essentially, continuous and cyclical. H aving m ovable p ro p erty com m itted in both spheres is a condition of preservation of production uniform ity.
ST R E A M S A N D SOU RCES OF M O V A BLE PR O PER TY
Real (thing) processes connected w ith m ovable p ro p e rty tak in g p a rt in economic processes of productive en terp rises ch aracterize stream s and m ovable p ro p erty 1. Thing stream s occur inside th e en terp rise and b etw een them and consist in su pporting and passing th ro u g h th e m achine as w ell as utilizing of resources, m aterials and sem i-m anu factu red articles. M ore over, th ere occurs th e o u tlet stre a m of finish p rod ucts and sem i-m an u factu red articles fo r sale as w ell as w astes from p ro d u ctiv e m achinery. M ovable p ro p erty resources, m ainly of raw m aterials, are g ath ered considering th e n o n -fittin g of in ten sity and tim e of su p p o rt and o u tle t stream s. T h ere is th e lack of synchronizing of su p p o rt and u tilization of lab o ur things in pro du ctiv e firm s in com parison w ith su p p o rt and sale of m aterials in tra d e en terp rises.
The real processes are described by horizontal flow of m aterial stream s and holding resources of th em in production centers taking p a rt in this flow. The active shaping of resources of th e p a rtic u la r ty p e m ay be based
only on know ledge of th e su p p o rt and o u tlet stre a m s c h aracter, th a t is size, in ten sity , s ta b ility and co n tin u ity level, of these stream s 2.
Irre g u la rity in functioning of m ovable pro p erty m ay cause breaks in m ate ria l flow o r co n trib u te to its getting slo y . In both cases it has a bad influence on effectiveness of the' p roductivę enterprise^ E very stopping of m ate ria l stream s caused b y lack of o u tp u t j synchronization of m achines causes th e necessity of g ath erin g [production resources, m aterials, 'additio nal tra n s p o rt and storin g of p rod u ction and form ing the resources of non- -fin ish ed production. These elem ents have significant effect on len gth en ing of productive cycle, increase i of costs of m an u factu re arid thus the decrease of benefit. ! i '
The d iffe re n t c h aracter has inform ation-décision stream w hose flow is both' horizontal — it is reflection of thing processes, and vertical — according to s tru c tu re of economic m anagem ent.
On th e w ay of inform ation-décision stream flow in economic process th e re should be placed in stru m en ts reg u lating th e velocity of the flow. These in stru m e n ts can be a lte rn a tiv e possibilities of buying m aterials,f p roductive incapabilities of m achines or predicated sale of products. In p rese n t supply (creating th e ’’n o rm al” m ate ria l m arket) and productive situ atio n (reduction of thing supply in accordance to lack of dem and) — th e only reg u la to r is th e sale of products.
The sale lęyel is s tric tly connected w ith financial situ a tio n and firm position on th e m ark e t, so it is consistent w ith m a rk e t tre a tm e n t as in s tru m e n t su p p o rtin g necessary in fo rm ation in m aking sovereign economic decisions by self-fin an cin g economic subjects.
FU N C T IO N S OF M O V A BLE PR O PE R TY
. G en eral fu n ctio n of m ovable p ro p e rty consists in continuous m ovem ent w hile it changes its n a tu ra l form,, taking m onetary, th en productive, n e x t goods and again m o n etary form 3.
The circu larity of m ovable p ro p erty (rotation) is abstractive notion;; it rep resen ts, how ever, th e re a l economic processes occurring in an e n te rp rise d u rin g specified t i m e 4. The fre q u e n c y .o f c irc u la rity is an essen tial elem ent influencing financial economics of th e firm because faste r m eans rotatio n causes decrease of th e sum necessary for co n tin u ity of production process and realization of pro d ucts being m ade. Saved excess
2 C. S k o w r o n e k : P rod u ction R eserves C ontrol E conom ic P rob lem s. PW E, W arszaw a 1977, s. 25.
3 T he E n terp rise in M arket E conom ics. M an agem en t — M arketing — F inances. Pr. zb. pod red. T. B al. W yd. II. PN O iK , R zeszów 1992, s. 108.
74 Barbara J a n czew sk a
Source: V. J o g, G. S u s z y ń s k i : op. cit., p. 11.
Fig. 1. C ircu latin g of m o v a b le prop erty C yrkulacja m ajątku ob rotow ego
of m ovable p ro p erty can be intended for developm ent (investm ent) purposes or red uction of req u e st for ban k credit.
M ovable p ro p erty consists of d iffe re n t m ate ria l and m o n eta ry goods th a t play d iffe re n t roles in economic process. Am ong them th e re a re th e following: production elem ents, th a t is w hole of lab o u r things and p a rt of labour m eans, production resu lts being finished products, sem i-m a nu factu red articles and c u rre n t production as w ell as m eans m ed iatin g in exchange sphere, th a t is m o n etary m eans on various levels of cir culation.
Movable p ro p erty is characterized by high level of financial liq u id ity . This m eans th a t it can be changed into cash v e ry im m ediately — it is m ost com m only accepted — in a year. Considering large d ifferen ces in liquidity betw een p a rticu la r form s of m ovable p rop erty , th e classification of them according to this criterio n is needed.
The m ost fre q u e n tly , th e re are disting u ished five (or three) 5 liq u id ity classes of essential m ovable p ro p erty :
1) stores of articles, raw m aterials, c u rre n t production, 2) debts and claims,
3) m o netary m eans, 4) sh o rt-te rm bonds,
5) in te r period settlem ents 6.
5 T he th ree cla sses of m ovab le property liq u id ity: store«, current e n te r p r ise ’s debts and cash w ith sécu rités e a sy to get rid of.
6 This cla ssifica tio n is used in b alan ces m ade by econ om ic u nits a ccord in g to D ecree of F in an ces M inister R eferrin g to R ules of A ccou n tan cy C arryin g from 15 01 91. Dz. U. nr 10/91, poz. 35.
From m ovable p ro p e rty classifications noted above th ere resu lts the v a rie ty and m u ltitu d e of functions fulfilled by its every type.
The rig h t m ovable p ro p e rty economics is ch aracterized by th e follow ing a ttrib u te s:
a) sh o rt period of life-tim e, usually less th an one year; exceptions occur in firm s w ith longer th an one year production cycle;
b) fast exchange in to a n o th e r m eans, fo r exam ple, cash is assigned for stores su p p lem en tin g th a t utilizes d u rin g sale and th e n tran sfo rm s into debts. The la tte r become again a cash a fte r com m itm ent regulations by our debtors; c o n stitu en ts of m ovable p ro p e rty continuously change despite stab le level of m ovable m eans am o un t th a t is held by the enterp rise;
c) synchronization am ong production, sale and d ebt collection; in practice, th ere is both lack of fu ll synchronization and suspension e le m en t; it arises, of course, th e need of precise m anaging of p a rticu la r types of e n te rp rise ’s m ovable property.
T heoretically, in a case of full in teg ratio n of production, sale and d eb t income processes in certain firm , th ere is no need to in terv en e by m anage m en t organs because autom atic activities w ould appreciate. T he economic rea lity to g eth e r w ith high suspension and activity risk m ake businessm en m anage w ith m ovable p ro p erty elem ents.
Effective m an ag em en t w ith m ovable p ro p erty includes th e following functions:
— se ttle m en t of dem anded size and s tru c tu re of m ovable property, — se ttle m e n t of ad m in istrativ e and organizational m anaging base for m ovable capital,
— financing of costs connected w ith m ovable p ro p erty 7.
C om petent m ovable p ro p erty m anagem ent becam e m ore im p o rtan t th a n ev er before; it w as due to increase of com petition am ong en terp rises on dom estic m arket, coming onto in te rn atio n a l m arkets, p a rticu la rly high in te re st rate resu ltin g from inflation. This causes th e tendency th a t firm m anagers p ay closer a tte n tio n to m ovable p ro p erty and technical im prove m en t of m ovable p ro p erty m anaging th an k s to usage of com puters.
Boards of m o d em firm s m u st n o t m inim ize th e problem of m ovable p ro p e rty th a t is, for m any enterprises, essential elem en t of financial resources. In a ran g e of m ovable p ro p erty m anaging th ere are applied m ethods of fin an cial m anaging in sh ort-term , o perating investigations and econom ic m ethods.
7 V. J o g , C. S u s z y ń s k i : M an agem en t o f E n terp rise’s F in an ces. M anager In fo rm a tio n C enter. W arszaw a 1993, s. 12.
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M OV A BLE PR O PE R TY OF PR O D U C T IV E E N T E R PR ISE S
E nterprises assum e th e a ttitu d e tow ards an issue of m ovable pro perty in various ways. Most often th e re are used indicators applied in a range of firm ’s econom ic-financial analysis 8 as w ell as practical m ethods defining th e m ost effective w ays of allocation of sh o rt-te rm resources. A pplying com puters and m odel view s of m ovable p ro p erty functioning can w iden th e usage of form alized m ethods of m ovable p ro p e rty effectiv e ness m easure. Com bining p ractical and form alized m ethods leading to effective m ovable p ro p erty m anaging as an aim of financial m anagem ent in a firm is th e m ost fre q u e n t. It consists in su p p o rtin g ofeasily applicable rules for m aking p roficien t econom ic-financial decisions as w ell as creating the base fo r p e rm a n en t control and estim ation of c u rre n t enterp rises policy.
Im p o rtan t m eaning fo r firm financial situ atio n is estim ation of in fluence of v arious facto r on th e level of m ovable p ro p e rty in v estm en t in economic process. Significant and calculable facto rs in fluencing m ovable p ro p e rty are th e size of e n te rp rise ’s a c tiv ity and m ovable m eans rotation. The application of sim ple analytical m ethods m akes possible to estim ate the effect of these factors 9.
A ttainable statistical d ata m ake possible only random estim ation relating to m ovable p ro p erty functioning 10. From such estim ation it resu lts th a t in 1985— 1990 th e finished products stores (7.4 p ercentag e points) and non-finished production (3.5) increased th e m ost. Among stores th e re w ere m aterials of decreasing tendencies in larg e st am ounts (decrease by 9.4). The backlog due to financing of m ovable p ro p erty increased over 25 tim es in th e sam e period, m o n eta ry resources increased 44 tim es, cash in circulation — 39 tim es and cash in cash-desk — 33 tim es.
The m ovable p ro p erty of all economics increased by 10.5% in 1992 w hen com pared w ith last year, w ith 40 tim es increasing of stores and settlem ents. Credits, loans and com m itm ents of firm s increased by 19%.
The relatio n of m ovable p ro p erty to cap ital and ow n fun ds in w hole economics was 42.2% in 1991, in in d u stry 47.2%. C u rre n t financial liq u idity factor (a ratio of stores, debts, m o n etary m eans and active in ter-p erio d settlem ents to w hole sum of credits, loans and com m itm ents) shaped on a level 1.03 in economics in 1991 and 0.96 in 1992, as w ell as 0.87 in
8 In th is a n a ly sis th e fo llo w in g in d ica to rs are estim ated : e ffe c tiv e n e s s (circu larity), liq u id ity (sh ort-term w o rth in ess), debt m a n a g em en t (lo n g -term w o rth in ess) and p rod u ctivity.
9 Stated estim a tio n s are in clu d ed in M. A d a m sk a ’s and W. O lszew sk i’s a rticle: T he A n a ly sis of M ovable P ro p erty in th e Firm . M aterial E conom ics no 1/92.
in d u stry in 1992 n . E stim ated factors testify to little increase of m ovable p ro p erty financing by ow n m eans. For com parison, average factor of c u rre n t fin an cial liq u id ity in 1991 w as 1.7, in te rm I of 1992 — 1.1. S h o rt-term factors of financial liq u id ity m easu red ’ as a relation of mo n e ta ry m eans w ith debts to w hole com m itm ents plus credits w ere in 1991 — 0.8 and 0.7 in te rm I of 1992. A verage cycle of debts settlem en t in 1991 w as 69 days, w ith increase by 17.4% (12 days) in term I of 1992. Cycles of com m itm ent settlem en ts w ere longer — respectively 95 and 115 days, so th e y increased by 21%.
S um m ingup, one shoul d u n d erlin e th e grow ing role of econom ic-finan cial analysis of e n te rp rise and m ovable p ro p e rty liqu idity . The im p o rtan t p a rt of it are: estim atio n of factors characterizing th in g s tru c tu re of m ovable p ro perty , description of rig h t capital stru c tu re of a firm , control of its circu larity and exploitation as w ell as defining of dem and for m ovable cap ital and c u rre n t control, to g eth e r w ith activities accelerating its circularity.
S T R E S Z C Z E N I E
Ze w zg lęd u na proces u ry n k o w ien ia p olsk iej gospodarki w zrosła rola m ajątku o b rotw ego w fu n k cjo n o w a n iu p rzed sięb iorstw . R ów n om iern ość każdego procesu g o s podarczego rea lizo w a n e g o w p rzed sięb iorstw ach w aru n k u je m .in. zaan gażow an ie w ła ś ciw eg o m ajątk u o b rotow ego — co do poziom u, rod zajów i struktury.
S tru m ien ie rzeczow e środ k ów ob rotow ych w y stęp u ją w e w n ą tr z przed sięb iorstw i m ięd zy nim i w postaci przed m iotów pracy oraz w y ro b ó w g otow ych , półfab ryk atów i odpadów m a teria łó w . N atom iast u trzy m y w a n ie zasob ów su ro w có w i m ateriałów w y n ik a z n ied o sto so w a n ia in ten sy w n o ści i czasu stru m ien i ich d o p ły w ó w z odpływ am i. S tru m ien ie in fo rm a cy jn o -d ecy zy jn e środ k ów ob rotow ych , będące od b iciem stru m ien i rzeczow ych , p o w in n y być w sp o m a g a n e in stru m en ta m i regu lu jącym i szyb k ość ich p rzep ływ u , ob ecn ie fu n k cję tę p ełn i rynek, a g łó w n ie w ielk o ść sprzed aży w yrob ów g otow ych .
Środki ob rotow e ch arak teryzu ją się w y so k im stop n iem p ły n n o ści fin an sow ej, szczeg ó ln ie go tó w k a i ła tw o z b y w a ln e p ap iery w a rto ścio w e oraz bieżące n ależn ości p rzed sięb iorstw a.
P r a w id ło w a gospodarka m ajątk iem ob rotow ym p ow in n a ch arak teryzow ać się krótk im cy k lem ich życia, szybką zam ianą postaci oraz sy n ch ro n iza cją m iędzy w y tw arzan iem , sprzedażą i w p ły w em n ależn ości. S k u teczn e nim i zarządzanie sp ro w a dza się do u sta len ia : w ła śc iw y c h p od staw sterow an ia, p ożądanych rozm iarów i stru k tu ry oraz zasad fin a n so w n ia n a k ła d ó w zw iązan ych z m a ją tk iem ob rotow ym .
11 T h ere are ed ited som e p u b lication s on firm ’s fin a n cia l liq u id ity and w ays of factors estim a tio n . I sp ecia lly turn to: M. S i e r p i ń s k a , T. J a c h n a : T he E n terp rise Ju d gem en t. A ccording to W orld S tandards. PW N, W arszaw a 1993, s. 79—39.
