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原文：
Effects Of Working Capital Management On Sme Profitability
The corporate finance literature has traditionally focud on the study of long-term financial decisions. Rearchers have particularly offered studies analyzing investments, capital structure, dividends or company valuation, among other topics. But the investment that firms make in short-term asts, and the resources ud with maturities of under one year, reprent the main share of items on a firm’s balance sheet. In fact, in our sample the current asts of small and medium-sized Spanish firms reprent 69.48 percent of their asts, and at the same time their current liabilities reprent more than 52.82 percent of their liabilities.
Working capital management is important becau of its effects on the firm’s profitability and risk, and conquently its value (Smith, 1980). On the one hand, maintaining high inventory levels reduces the cost of possible interruptions in the production process, or of loss of business due to the scarcity of products, reduces
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decisions
supply costs, and protects against price fluctuations, among other advantages (Blinder and Manccini, 1991). On the other, granting trade credit favors the firm’s sales in various ways. Trade credit can act as an effective price cut (Brennan, Maksimovic and Zechner,1988; Petern and Rajan, 1997), incentivizes customers to acquire merchandi at times of low demand (Emery, 1987), allows customers to check that the merchandi they receive is as agreed (quantity and quality) and to ensure that the rvices contracted are carried out (Smith, 1987), and helps firms to strengthen long-term relationships with their customers (Ng, Smith and Smith, 1999). However, firms that invest heavily in inventory and trade credit can suffer reduced profitability. Thus,the greater the investment in current asts, the lower the risk, but also the lower the profitability obtained.
On the other hand, trade credit is a spontaneous source of financing that reduces the amount required to finance the sums tied up in the inventory and customer accounts. But we should bear in mind that financing from suppliers can have a very high implicit cost if early payment discounts are available. In fact the opportunity cost may exceed 20 percent, depending on the discount percentage and the discount period granted (Wilner,2000; Ng, Smith and Smith, 1999). In this respect, previous studies have analyzed the high cost of trade credit, and find that firms finance themlves with ller credit when they do not have other more economic sources of financing available (Petern and Rajan, 1994 and 1997).
feynmanDecisions about how much to invest in the customer and inventory accounts, and how much credit to accept from suppliers, are reflected in the firm’s cash conve rsion cycle, which reprents the average number of days between the date when the firm must start paying its suppliers and the date when it begins to collect payments from its customers. Some previous studies have ud this measure to analyze whether shortening the cash conversion cycle has positive or negative effects on the firm’s profitability.Specifically, Shin and Soenen (1998) analyze the relation between the cash conversion cycle and profitability for a sample of firms listed on the US stock exchange during the period 1974-1994. Their results show that reducing the cash conversion cycle to a reasonable extent increas firms’ profitability. More recently,
Deloof (2003) analyzes a sample of large Belgian firms during the period 1992-1996. His results confirm that Belgian firms can improve their profitability by reducing the number of days accounts receivable are outstanding and reducing inventories. Moreover, he finds that less profitable firms wait longer to pay their bills.
accidentalThe previous studies have focud their analysis on larger firms. However, the management of current asts and liabilities is particularly important in the ca of small and medium-sized companies. Most of the companies’ asts are in the form of current asts. Also, current liabilities
are one of their main sources of external finance in view of their difficulties in obtaining funding in the long-term capital markets(Petern and Rajan, 1997) and the financing constraints that they face (Whited, 1992; Fazzari and Petern, 1993). In this respect, Elliehaun and Woken (1993), Petern and Rajan (1997) and Danielson and Scott (2000) show that small and medium-sized US firms u vendor financing when they have run out of debt. Thus, efficient working capital management is particularly important for smaller companies (Peel and Wilson,1996).
In this context, the objective of the current work is to provide empirical evidence about the effects of working capital management on profitability for a panel made up of 8,872 SMEs during the period 1996-2002. This work contributes to the literature in two ways. First, no previous such evidence exists for the ca of SMEs. We u a sample of Spanish SMEs that operate within the so-called continental model, which is characterized by its less developed capital markets (La Porta, López-de-Silanes, Shleifer, and Vishny, 1997), and by the fact that most resources are channeled through financial intermediaries (Pampillón, 2000). All this suggests that Spanish SMEs have fewer alternative sources of external finance available, which makes them more dependent on short-term finance in general, and on trade credit in particular. As Demirguc-Kunt and Maksimovic (2002) suggest, firms operating in countries with more developed banking systems grant more trade credit t
o their customers, and at the same time they receive more finance from their own suppliers. The cond contribution is that, unlike the previous studies by Shin and Soenen (1998) and Deloof (2003), in the current work we have conducted tests robust to the possible prence of
endogeneity problems. The aim is to ensure that the relationships found in the analysis carried out are due to the effects of the cash conversion cycle on corporate profitability and not vice versa.
Our findings suggest that managers can create value by reducing their firm’s number of days accounts receivable and inventories. Similarly, shortening the cash conversion cycle also improves the firm’s profitability.
We obtained the data ud in this study from the AMADEUS databa. This databa was developed by Bureau van Dijk, and contains financial and economic data on European companies.
The sample compris small and medium-sized firms from Spain. The lection of SMEs was carried out according to the requirements established by the European Commission’s recommendation 96/280/CE of 3 April, 1996, on the definition of small and medium-sized firms. Specifically, we lected tho firms meeting the following criteria for at least three years: a) have fewer than 250 employees; b) turn over less than €40 million; and c) posss less than €27 million of
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In addition to the application of tho lection criteria, we applied a ries of filters. Thus, we eliminated the obrvations of firms with anomalies in their accounts, such as negative values in their asts, current asts, fixed asts, liabilities, current liabilities, capital, depreciation, or interest paid. We removed obrvations of entry items from the balance sheet and profit and loss account exhibiting signs that were contrary to reasonable expectations. Finally, we eliminated 1 percent of the extreme values prented by veral variables. As a result of applying the filters, we ended up with a sample of 38,464 obrvations.
In order to introduce the effect of the economic cycle on the levels invested in working capital, we obtained information about the annual GDP growth in Spain from Eurostat.
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In order to analyze the effects of working capital management on the firm’s profitability, we ud the return on asts (ROA) as the dependent variable. We defined this variable as the ratio of earnings before interest and tax to asts.福克斯新闻
With regards to the independent variables, we measured working capital
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management by using the number of days accounts receivable, number of days of inventory and number of days accounts payable. In this respect, number of days accounts receivable (AR) is calculated as 365 ×[accounts receivable/sales]. This variable reprents the average number of days that the firm takes to collect payments from its customers. The higher the value, the higher its investment in accounts receivable.
We calculated the number of days of inventory (INV) as 365 ×[inventories/purchas]. This variable reflects the average number of days of stock held by the firm. Longer storage times reprent a greater investment in inventory for a particular level of operations.
The number of days accounts payable (AP) reflects the average time it takes firms to pay their suppliers. We calculated this as 365 × [accounts payable/purchas]. The higher the value, the longer firms take to ttle their payment commitments to their suppliers.
Considering the three periods jointly, we estimated the cash conversion cycle(CCC). This variable is calculated as the number of days accounts receivable plus thenumber of days of inventory minus the number of days accounts payable. The longerthe cash conversion cycle, the greater the net investment in current asts, and hence the greater the need for financing of current asts.
i will be thereTogether with the variables, we introduced as control variables the size of the firm, the growth in its sales, and its leverage. We measured the size (SIZE) as the logarithm of asts, the sales growth (SGROW) as (Sales1 –Sales0)/Sales0, the leverage(DEBT) as the ratio of debt to liabilities. Dellof (2003) in his study of large Belgian firms also considered the ratio of fixed financial asts to total asts as a control variable. For some firms in his study such asts are a significant part of total asts.However our study focus on SMEs who fixed financial asts are less important. In fact, companies in our sample invest little in fixed financial asts (a mean of 3.92 percent, but a median of 0.05 percent). Nevertheless, the results remain unaltered whenwe include this variable.
旅游胜地英文Furthermore, and since good economic conditions tend to be reflected in a firm’s
