Empirical Evidence from Business Start-ups. I am also very thankful to my parents for their continuous support and for all the given opportunities and encouragements, which enabled me to reach the goals in my live. Another component of working capital is accounts payable, which is in other words not extending trade credit but receiving it from a supplier. While WCM focuses mainly on the short-term financing and short-term investment decisions of firms Sharma and Kumar, Furthermore these periods are then compared and then determined, whether companies have to alter their management concerning their working capital management during times of a crisis. Management Science, 56 1 , pp.

Also evidence is found which support the theory that supplying firms have advantages over financial institutions concerning short-term financing. Higher average results of 96,1 days, 97,8 and days was found by respectively Lazaridis and Tryfonidis , Garcia-Teruel and Martinez-Solano and Sharma and Kumar Current liabilities Cash and other liabilities that have to be paid within one year. Many firms have cited that restrictions of bank credit are one of the most important constraints to operation and growth of their business. Working Capital Management and Corporate Profitability: They found evidence for a negative relation between liquidity and profitability and a positive relation between the size of the firm and profitability.

His data was gathered over the period, which led to firm-year observations.

The method that was used is the OLS regression analysis, in which the number of days accounts receivables, accounts payables, inventories and the cash conversion cycle are analysed. There are two reasons for this. The reason for this is that larger firms are lending aid to their financially constraint customers and by doing that, saving a part of their future sales. Another component of mv capital is accounts payable, which is in other words not extending trade credit but receiving it from a supplier.


An explanation for this difference is that more profitable firms pay their bills mxster, also stated by Deloof These findings are in contradiction with the finding of articles such as Ramey and Love et al. The motives for each perspective will be elaborated in the following part.

This chapter started with the uhwente of the basics of working capital. The second and most important reason for firms to keep inventory levels low are the costs involved. Htesis mentioned earlier in this thesis, he argued that this is because profitable firms wait longer to pay their bills and firms use these short-term loans as a source of funds to increase their working capital investment and thus increasing their profitability.

Size Natural logarithm of sales.

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Similar results were found by Karaduman et al. Sample description The sample of this study will contain Dutch public listed firms on the Euronext Amsterdam. In the second part of this chapter the main bodies of working capital research are discussed in detail. A watery way an instant seen, thesus darkly closing clouds between.

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The second reason is that it allows a comparison between these periods, which could indicate whether Dutch companies have to alter their working capital management when the economy is masfer to a recession. Net Operating Working Capital Behaviour: Journal of Cost Management, 14 6pp.

American Economic Review, 77, pp. All these studies have used regression analyses using different independent variables for profitability.

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When determining a WCM policy, a firm has to consider both sides of the coin and try to find the right balance between risk and return. Account payables can be seen as a short term loan, or in other words, a source of funding.


As mentioned before, Meltzer found evidence that high cash rich firms increase their extension of trade credit. The regression analyses using the dependent variable using ROA are represented in table 4. Also limitations are caused by the fact that only one crisis period, the financial crisis ofis used. As can be seen in the table 2.

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Empirical Evidence from India. The VIF scores can be found between the [ ]. 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.

master thesis utwente mb

Remember me on this computer. The chapter ends with the discussion of the sample and the data sources. Although the total amount of receivables on a balance sheet of a firm could be constant over time, its components are continually shifting and therefore thesix monitoring is needed Firth, What can be concluded in the above discussion is that financially constraint firms, either large or small, increase the use of trade credit to substitute the non-accessible bank thseis.

Even if they have the ability and resources to provide it.