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Working capital management in SMEs
Author(s) -
BañosCaballero Sonia,
GarcíaTeruel Pedro J.,
MartínezSolano Pedro
Publication year - 2010
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.2009.00331.x
Subject(s) - working capital , leverage (statistics) , business , fixed asset , cash conversion cycle , cash flow , monetary economics , investment (military) , finance , cash , industrial organization , operating cash flow , economics , microeconomics , production (economics) , machine learning , politics , computer science , political science , law
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.