scholarly journals Operational risk in current assets investment decisions: Portfolio management approach in accounts receivable

2008 ◽  
Vol 54 (No. 1) ◽  
pp. 12-19 ◽  
Author(s):  
G. Michalski
Keyword(s):  
Portfolio Management ◽  
Asset Management ◽  
Financial Management ◽  
Firm Value ◽  
Trade Credit ◽  
Profit Maximization ◽  
Potential Effect ◽  
Management Approach ◽  
Accounts Receivable ◽  
Enterprise Value

The basic financial purpose of an enterprise is maximization of its value. Trade credit management should also contribute to the realization of this fundamental aim. Many of the current asset management models that are found in the financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to another aim (i.e., maximization of the enterprise value). The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences that can result from operating risk that is related to purchasers using payment postponement for goods and/or services. The present article offers a method that uses the portfolio management theory to determine the level of accounts receivable in a firm. An increase in the level of accounts receivables in a firm increases both net working capital and the costs of holding and managing accounts receivables. Both of these decrease the value of the firm, but a liberal policy in accounts receivable coupled with the portfolio management approach could increase the value. Efforts to assign ways to manage these risks were also undertaken; among them, a special attention was paid to adapting the assumptions from the portfolio theory as well as gauging the potential effect on the firm value.

scholarly journals Portfolio management approach in trade credit decision making

2007 ◽  
Vol 59 (4) ◽  
pp. 546-559 ◽  
Author(s):  
Grzegorz Michalski
Keyword(s):  
Portfolio Management ◽  
Asset Management ◽  
Financial Management ◽  
Trade Credit ◽  
Profit Maximization ◽  
Management Approach ◽  
Accounts Receivable ◽  
Enterprise Value ◽  
Value Maximization ◽  
Current Asset

The basic financial purpose of an enterprise is maximization of its value Trade credit management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to maximization of enterprise value. The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences that can result from operating risk that is related to purchasers using payment postponement for goods and/or services. The present article offers a method that uses portfolio management theory to determine the level of accounts receivable in a firm.

scholarly journals Trade Credit Decision Making Based on Portfolio Management Approach

Ekonomika ◽  
2007 ◽  
Vol 80 ◽  
Author(s):  
Grzegorz Michalski
Keyword(s):  
Portfolio Management ◽  
Asset Management ◽  
Financial Management ◽  
Trade Credit ◽  
Profit Maximization ◽  
Management Approach ◽  
Accounts Receivable ◽  
Enterprise Value ◽  
Value Maximization ◽  
Current Asset

The basic financial purpose of an enterprise is maximization of its value. Trade credit management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to maximization of enterprise value. The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences that can result from operating risk related to purchasers using payment postponement for goods and I or services. The present article offers a method that uses portfolio management theory to determine the level of accounts receivable in a firm. An increase in the level of accounts receivables in a firm increases both the net working capital and the costs of holding and managing accounts receivables.

scholarly journals Value based management approach in inventory management

2009 ◽  
Vol 61 (1-2) ◽  
pp. 36-47 ◽  
Author(s):  
Grzegorz Michalski
Keyword(s):  
Inventory Management ◽  
Financial Management ◽  
Profit Maximization ◽  
Management Model ◽  
Management Approach ◽  
Enterprise Value ◽  
Value Based Management ◽  
Model Modification ◽  
Management Models ◽  
Assets Management

The basic financial purpose of the firm is maximization of its value. A inventory management should also contribute to realization of this basic aim. Many current assets management models which we can find in the literature relating to financial management were constructed with the assumption of book profit maximization as basic aim. These models could lacking what relates to another aim, i.e., maximization of enterprise value. This article presents the value based inventory management model modification.

The Impact of Effective Expansion around on Energy Enterprise Value

2013 ◽  
Vol 805-806 ◽  
pp. 1443-1446
Author(s):  
Ze Hong Li ◽  
Xiang Yu Meng
Keyword(s):  
Financial Management ◽  
Profit Maximization ◽  
Discounted Cash Flow ◽  
Enterprise Value ◽  
Management Objectives ◽  
Social Nature ◽  
Effective Expansion ◽  
Three Stages ◽  
Social And Environmental Responsibilities ◽  
The Impact

Financial management objectives have gone through three stages; they were maximization of profit, maximization of shareholders' equity and maximization of enterprise value. At present, the maximization of enterprise value is the most widely used financial management objective. Energy enterprise as the foundation of economic operation, it has economy nature and social nature for social and environmental responsibilities. It is important to weigh the interests of all parties to make energy enterprise value achieve real maximum. In this paper, energy enterprise effectiveness will be expanded, and discounted cash flow model will be used to analysis the impact of effective expansion around on energy enterprise value.

Determinants of trade credit financing: a dynamic analysis comparing agri-food cooperatives and non-cooperatives

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
MCarmen Martínez-Victoria ◽  
Mariluz Maté-Sanchez-Val
Keyword(s):  
Trade Credit ◽  
Empirical Studies ◽  
Profit Maximization ◽  
Cash Flows ◽  
Partial Adjustment ◽  
Content Type ◽  
Accounts Receivable ◽  
Dynamic Panel Model ◽  
Credit Financing ◽  
General Method Of Moments

PurposeThe particular characteristics of agri-food cooperatives reduce their ability to access external financial resources. The purpose of this paper is to explore the factors influencing the agri-food cooperatives' trade credit operations by measuring their accounts receivable and comparing the results with agri-food investor-owned firms (IOFs).Design/methodology/approachThe authors apply a partial adjustment model (PAM) estimated using a dynamic panel model with a two-step general method of moments (GMM) estimator to a sample of 11,930 Spanish agri-food cooperatives and IOFs for the period 2011–2018.FindingsThe study concludes that cooperatives and IOFs have an accounts receivable target, which they attempt to achieve rapidly. Cooperatives tend to behave as IOFs do, but they present lower adjustment coefficients. This difference seems to be explained by the unique characteristics of cooperatives which set different economic and social goals, not just profit maximization as IOFs. The findings show differences between the financial and commercial purposes of the cooperatives and IOFs as a result of their internal management policies. Larger cooperatives with access to external financial sources, positive cash flows and operational necessities will grant trade credit.Originality/valueThis study gives interesting implications for cooperative managers and policymakers to help them to understand the strategies behind trade credit policies. Previous empirical studies on the agri-food sector are scarce and focus on IOFs without considering the role of trade credit in European cooperatives.

scholarly journals Corporate inventory management with value maximization in view

2008 ◽  
Vol 54 (No. 5) ◽  
pp. 187-192 ◽  
Author(s):  
G. Michalski
Keyword(s):  
Inventory Management ◽  
Financial Management ◽  
Profit Maximization ◽  
Management Model ◽  
Enterprise Value ◽  
Value Maximization ◽  
Model Modification ◽  
Management Models ◽  
Assets Management

The basic financial purpose of the firm is maximization of its value. An inventory management should also contribute to the realization of this basic aim. Many current assets management models which we can find in the literature relating to financial management were constructed with the assumption of book profit maximization as the basic aim. These models could be lacking what relates to another aim, i.e., maximization of the enterprise value. This article presents the value based inventory management model modification.

scholarly journals Efficiency of Working Capital Management and Firm Value: Evidence From Chinese Listed Firms

2019 ◽  
Vol 10 (6) ◽  
pp. 133
Author(s):  
Ratnam Vijayakumaran
Keyword(s):  
Financial Management ◽  
Firm Value ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Trade Cycle ◽  
Accounts Receivable ◽  
Listed Firms ◽  
Chinese Listed Companies ◽  
The Relationship

This paper examines the relationship between the efficiency of working capital management (WCM) and the firm value, focusing on a large panel of Chinese listed companies. WCM which involves a trade-off between profitability and risk is a very important element of the financial management of the firm. The net trade cycle (NTC) and its components are used to measure efficiency of WCM, while the firm value is measured by the Tobin’s Q ratio. The study makes use of the panel data methodology to estimate the regression models. This study reports that the net trade cycle is negatively associated with firm value. More specially, the study finds that firm value is adversely affected by the number of days accounts receivable and inventories, indicating that working capital provides a real opportunity for financial executives to release cash and improve firms’ value. The findings of this study are consistent with the idea that managers can enhance firm value by efficiently managing the investment in working capital.

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