Open AccessA comparison of strategies for working capital management of listed food companies from Northern Europe
Author(s) -
Serhiy Zabolotnyy,
Timo Sipiläinen
Publication year - 2020
Publication title -
agricultural and food science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 35
eISSN - 1795-1895
pISSN - 1459-6067
DOI - 10.23986/afsci.88257
Subject(s) - working capital , business , return on capital employed , market liquidity , finance , current liability , flexibility (engineering) , current ratio , current asset , return on assets , sample (material) , assets under management , capital (architecture) , financial management , profitability index , financial capital , fixed asset , economics , production (economics) , capital formation , microeconomics , profit (economics) , chemistry , management , chromatography , archaeology , history
The research presents the application of fuzzy logic for synthetic evaluation of strategies for working capital management of twelve food companies from Northern Europe in 2005–2015. A set of financial ratios formed an aggregated indicator reflecting the complexity of relationships between the level and structure of current assets and liabilities of a firm. Based on the proposed indicator, four types of strategies for working capital management were identified and characterized in terms of risk and return preferences. Only a few companies from the sample demonstrated a direct orientation on liquidity or value within their strategies for working capital management. To retain flexibility in short-term financial management, most firms applied moderate policies for current assets and liabilities that helped them in maintaining liquidity and reducing the cost of financing. The integrity of the proposed method for the synthetic evaluation of working capital management makes it a convenient managerial tool suitable for use in firms operating in a turbulent business environment.