Chistruga Vladislav

2) Analysis of observance of the net working capital requiremenеnt

Indicators At the beginning of the reporting At the end of the reporting

year (as of January 1 2018) year (as of December 31
2019)

1.Actual amount of net working 3972,4 6585,6

capital, th lei

2.Net working capital 1998,25 4358,53

requirement, th lei

3.Excess (+), deficit (-)of net 1974,15 2227,07

working capital

Conclusion:

In comparison with beginning of the reporting year where was an excess of net working capital in amount of
1974,15 th lei, at the end of 2019 has an excess of net working capital in amount of 2227,07 thous. lei.
Excessive net working capital has less unpleasant consequences than deficit, even though the company may
meet following risks: • stock maintenance costs (lease of deposits, electricity, heating, refrigeration,
interest, insurance, security etc.) • aging, obsolescence and deterioration of materials, goods; • stock
shortage, loss, theft, pilferage; • decrease of asset profitability (capital invested in excessive current assets
doesn’t generate profit).

4) Liquidity ratio analysis

Ratios Method Previous Current Difference (+;-)

L current (2,0 – 2,5) >1 CA/CL 1,47 1,55 0,08

(CA-IN-
L quick (0,7 - 0,8) 0,4 0,52 0,12
OCA)/CL

L cash (0,2 - 0,25) CH/CL 0,06 0,05 -0,01

Conclusion: At the end of 2019 the current ratio is 1,55. This indicator slightly improved its level as
compared with the beginning of the reporting year, when it was of 1,47. But in both cases this ratio is
significantly higher than its optimal interval (2,0-2,5). That may cause serious difficulties regarding stock
maintenance costs and decrease of current asset profitability.
At the beginning of the reporting year the actual ratio (0,4) was well down the optimal interval (0,7-0,8). By
the end of 2019, the quick ratio increased to the level of (0,52). This evolution may lead or represent the
existence of doubtful receivables. The cash ratio slightly decreased from 0,06 at the beginning of 2018 to
0,01 at the end. But it remains significantly lower than its optimal interval (0,2-0,25). This situation could
negatively affect the process of decision making in case of one-to-seven day transactions (overnight credits
and loans etc.).