The Great Financial Crisis: Yang also found evidence that indicate that firms which are not financially constrained increase their accounts receivables and so extend more trade credit to their customers. They found that smaller firms, and firms who lack product quality reputation, extend more trade credit relative to sales. Corporate Finance and the Business Cycle: But this policy is criticised by Wang Financial Management, 38, pp. The scores of these statistical tests are accepted, implicating that there is no presence of autocorrelation and multicollinearity in the data.

Accounting in a Business Context. These comparisons will focus on the findings of the non-crisis period of this study, because only this period has been studied by other authors. A remarkable finding of Nilsen is that he found that larger firms without bond rating also increase their use of trade credit, even when they have high amount of cash. For firms which are financially constrained and for which there is no alternative source of finance, a trade credit might be a substitute for a short-term bank loan Kohler et al. Other advantages and disadvantages of this approach can be seen in the trade-off figures mentioned earlier. In spite of this contradicting evidence, the expectations are that large public listed firms increase their extension of trade credit or the given terms in this extension in times of a crisis, to support their financially constraint customers. Accounts receivables, which is a part of trade credit, stimulates sales because it allows customers to assess product quality before paying Long, Malitz and Ravid, ; and Deloof and Jegers,

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The most widely and simple motive of managing inventories is the cost motive, which is often based on the Transaction Cost Economics TCE theory Emery and Marques, In the next chapter the hypotheses will be developed, using the expectations based on the different theories ytwente studies concerning working capital management. Excellent Business Review, 12 1pp.


With the dependent variable ROA the percentage is The non-crisis period and crisis period are then compared with each other and differences are highlighted. Pakistan Journal of Commerce and Social Sciences, 1 1pp.

This is also the case with uncollected and excel,ent trade credit, which can lead to cash inflow problems for the firm. It could imply that certain firms should not minimize their accounts receivables during crisis periods, but since there is no significant relation this cannot be concluded. This saves a lot of costs concerning inventory stocking.

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These findings imply that managers can create shareholder value by shortening the CCC. The reasons for these measurements are given in paragraph B of this chapter and are based on the various studies on the literature of Working Capital and its management.

This theory of price discrimination is empirically tested by Petersen and Rajan utwenge The motives for each perspective will be elaborated in the following part. This is likely to be caused by the fact that they study large firms listed on the New York Stock Exchange. It ranges from zero to four and a score of two implies that there is no autocorrelation in the sample.

excellent master thesis utwente

Current assets are normally divided in cash and cash equivalents, short-term investments, trade and other receivables, prepaid expenses, inventories and work-in-progress. The research should include multiple countries or at least a relative bigger country such as the United States, China or India.

excellent master thesis utwente

Long-term debt Loans that have maturities of longer than one year. Growth This control variable is calculated as follows: This is used in the studies of Samiloglu and Demirgunes and Sharma and Kumar Deloof argues that with inventory management there is a trade-off between sales and costs.

Since the results with the dependent variable GOP indicated a significant negative effect of accounts payables on the profitability of a firm, managers are better of keeping the levels of accounts payables to a reasonable excelleny during crisis years. Since any theory is not stating otherwise, this is still expected to be kept as minimal as possible during a crisis.


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This means that having a WCM policy which results in a low as possible accounts receivables and inventories and the highest amount of accounts payables leads to the highest profitability. Journal of Financial and Quantitative Analysis, 9, pp. Firms are seen more profitable if they give their clients more trade credit, therefore they have more clients, who means more sales, which in turn leads to more profitability.

The CCC is the time lag between the paying of the raw materials and the receipt of money from the sale of goods. If this firm decides to give one of his customers more trade credit resulting with an increase of the average days of accounts receivables to 66 days, the profitability of this firm will decrease with Research on working capital policies The total sample will contain about 37 firms with observations over the period and excelldnt, which are named and classified uteente on the NACE classification index in Appendix A.

Current liabilities are divided in trade payables, short-term debt and accrued liabilities. Chapter five Empirical Findings mastet the various statistical analyses of this study. Current liabilities Cash and other liabilities that have to be paid within one year. The findings also imply that aggressive liquidity management, e. Part A discusses the descriptive statistics; part B addresses the correlation analyses.