MASTER THESIS UTWENTE MB

This difference is likely to be caused by the different macro-economic conditions in Nigeria. The other motive which is in line with the above motive is the advantage a non-financial firm has when assessing creditworthiness compared to financial institutions. Drienerlolaan 5 Post office box: As mentioned earlier in this thesis, working capital management consists of three different parts. Offering Delayed Payment to Guarantee Product Quality Another commercial motive of using trade credit is for the assessment of product quality. European Journal of Scientific Research, 15 3 , pp.

A somewhat similar percentage is found by Deloof , who found Smaller percentages were found by Garcia-Teruel and Martinez , Karaduman et al. What they found, is in contradiction with all the above mentioned studies. 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. Financial Review, 18 3 , pp. Working Capital Policy and Operating Risk: 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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Also the sample focus of larger firms can have an effect on this relation. This control variable is used in studies like Samiloglu and DemirgunesSharma and KumarShin and SoenenKaraduman et al. This is caused by the fact that future sales of this customer are saved this way.

They found that account receivables are also positively related with ROA and that account payables masteg negatively related to ROA.

master thesis utwente mb

Empirical Evidence from Pakistan. This trade credit provides a delay until the cash is received.

Working capital management is vital for a firm, especially for manufacturing, trading and distribution firms, because in these firms WCM directly affect the profitability and liquidity.

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Scholarship fund business plan. Gross Operating Masyer Measure of profit before depreciation and amortization 1-year average.

master thesis utwente mb

Upper Saddle River, NY: They use a sample of secondary data on public listed firms on the Vietnam stock market for the period of A firm needs to determine an optimal level of the amount of stocks. Much stronger percentage was found by Lazaridis and TryfonidisZariyawati et al. As with rhesis research, there are some limitations of this study. International Journal of Business and Management, 7 1pp.

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The first is allowing a delay in payment and second is by giving a discount in payment, which can be seen as a price reduction. European Journal of Scientific Research, 15 3pp.

For this reason firms should even give more attention to the inventory levels during crisis periods, and make certain the levels of inventories are kept at a reasonable minimum. They found that the trade credit offered by suppliers is especially important for SMEs, because they have more mg obtaining finance through credit institutions.

This study will also contribute by studying the management of working capital within The Netherlands, which is not done before by a reputable author, according to the searches I made using the databases available for student mastter the University uwtente Twente. The findings also imply that aggressive liquidity management, e. This is based on the fact that an investment can only be earned back if the buyer stays in business.

These findings are in contradiction with the finding of articles such matser Ramey and Love et al.

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Journal of Finance, 43, pp. In this study the natural logarithm of sales will be used as a measurement for size, because it is often used in the working capital literature.

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A sample of 37 firms is used, which are among the fifty largest companies in The Netherlands. Part A discusses the descriptive statistics; part B addresses the correlation analyses. A firm needs to determine an optimal level of the amount of stocks. They found that both technological and managerial factors have a significant influence on the determining of the levels of inventories. Both in the long run and short run these variables are positively related.

As mentioned earlier in the chapter three Hypothesis, relative larger public listed firms can be seen as financial intermediaries during crisis periods Meltzer, ; Brechling and Lipsey, ; Ramey, ; Kohler et al.

These costs are for example storage costs, management costs, security costs, insurance costs and cost of tying up cash. He argued that firms keep higher levels of inventory to minimalize the risk of possible production stoppages or when a firm has temporarily no access to raw materials.

Inventories Raw materials, work-in-process, and finished product that the venture hopes to sell. They also found that account payables are negatively related to profitability, which is in line with Deloof