Factor analysis of working capital management of an industrial enterprise

Effective management of working capital of industrial enterprises is of critical importance in conditions of high material consumption of production, a long operating cycle, sanctions restrictions, an increase in the key interest rate and general macroeconomic instability. For the Russian steel industry, where the production cycle can reach several months, maintaining liquidity and optimizing the working capital structure are becoming key factors for financial stability. Using the example of PJSC Severstal, the largest full-cycle metallurgical company, the analysis of the composition, structure and dynamics of current assets for the period 2021-2025 was carried out. The assessment of key performance indicators is given: turnover coefficients, liquidity and profitability of working capital. To quantify the impact of factors on changes in the operating cycle and profitability of current assets, methods of deterministic factor analysis - chain substitutions and absolute differences - were applied. It was revealed that the lengthening of the operating cycle by 15 days was mainly due to a slowdown in inventory turnover (contribution +14 days), while the change in accounts receivable and accounts payable had an insignificant impact. The profitability of current assets decreased by 116.9 percentage points during the analyzed period. The analysis based on the factor model showed that a drop in return on sales (81.4 percentage points) is important for the development of the enterprise, and the negative dynamics is associated with both a deterioration in operational efficiency and a slowdown in the rate of asset conversion into cash. Based on the analysis, a set of measures can be proposed, which includes the introduction of a risk-based digital inventory management system based on data on market conditions and production schedules. Another direction may be the development of operational Cash Flow planning with a horizon of 14-30 days to prevent cash gaps. It is also important to optimize the structure of the company's short-term liabilities by replacing expensive bank loans with cheaper instruments (including intra-group financing). The implementation of the proposed measures may make it possible to reduce inefficient capital allocation by 16.5 billion rubles, reduce the duration of turnover of current assets from 130 to 123 days and increase their profitability from 70.4% to 78.7%, which confirms the economic validity of the recommendations.