Working capital management in SMEs

By Sonia Baños-Caballero, Pedro J. García-Teruel, P. Martínez‐Solano. 2010

296 citations recorded by the source corpus.

This paper analyses the determinants of Cash Conversion Cycle (CCC) for small- and medium-sized firms. It has been found that these firms have a target CCC length to which they attempt to converge, and that they try to adjust to their target quickly. The results also show that it is longer for older firms and companies with greater cash flows. In contrast, firms with more growth opportunities, and firms with higher leverage, investment in fixed assets and return on assets have a more aggressive working capital policy.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a007be56519113d78d2c33559d38724839e53fce

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Citations in the corpus

The impact of cash conversion cycle on firm profitability: An empirical study based on Swedish data (2014, background): “Moreover, previous empirical studies suggest that firm age positively affects profitability (Garcia-Teruel and Martinez-Solano, 2007; Ban˜os-Caballero et al. , 2010; Mathuva, 2010), so we hypothesize accordingly: H3.”
Cash conversion cycle and corporate performance: Global evidence (2018, methodology): “5 Williamson (1999), Wang (2002), Chiou, Cheng, and Wu (2006), Bates, Kahle, and Stulz (2009), and Baños-Caballero et al. (2010), a firm’s profitability and value also influence working capital management.”
Working capital level influence on SME profitability (2016, unknown): “However, studies show that WCM is more important to SMEs than to larger firms (Banos-Caballero et al., 2010).”
Cash Conversion Cycle and Value-Enhancing Operations: Theory and Evidence for a Free Lunch (2017, background): “Studies of the actions that firms actually take to manage their CCCs are scarce, although some authors provide indirect evidence that improving operations enhances working capital investments (Gardner et al. 1986; García-Teruel and Martinez-Solano 2007; Baños-Caballero et al. 2010, 2012, 2014).”
Working capital management and firm profitability (2013, background): “…firm might, for instance, apply a loose trade credit policy allowing customers to assess product quality before paying, or a firm might hold large inventories, reducing the risk of lost sales due to stock-outs (Baños-Caballero et al. 2010; García-Teruel and Martínez-Solano 2010; Long et al. 1993).”