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- Title
WHAT DRIVES WORKING CAPITAL LEVELS?
- Authors
DORSMAN, André B.; WESTERMAN, Wim
- Abstract
This study examines factors that influence the level of working capital. This can be measured by the length of the cash conversion cycle (CCC), the period it takes for investments in inventory to generate cash. The CCC is influenced by contingencies: cultures and habits, rules and regulations, information systems, economic conditions, markets and operations, aswell as factors: asset size, sales growth, solvency and liquidity. The article furthermore discusses several specific drivers of working capital, which are related to the accounts of payables, inventory and accounts receivables cycles. While the created framework calls for country and business-wise adaptations, it can yet inspire corporate managers and academic researchers, such as shown by an example case drawn from real world experiences. Two other cases reveal though, that the corporate philosophy cannot be neglected as a driver of working capital levels.
- Subjects
WORKING capital; ECONOMIC history
- Publication
Hacettepe University Journal of Economics & Administrative Sciences / Hacettepe Üniversitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi, 2019, Vol 37, Issue 1, p41
- ISSN
1301-8752
- Publication type
Article