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外文翻译
原文
Effects of working capital management on SME protability
Material Source: International Journal of Manageria Finance Vol. 3 No. 2, 2007
Author:Pedro Juan Garc?′a-TeruelPedro Mart?′nez-Solano
The corporate ?nance literature has traditionally focused on the study of long-term ?nancial decisions. Researchers have particularly offered studies analyzing investments, capital structure, dividends or company valuation, among other topics. But the investment that ?rms make in short-term assets, and the resources used with maturities of under one year, represent the main share of items on a ?rm’s balance sheet. In fact, in the sample used in the present study, current assets of small and medium-sized Spanish ?rms represent 69 percent of their assets, and at the same time their current liabilities represent more than 52 percent of their liabilities.
Working capital management is important because of its effects on the ?rm’s pro?tability and risk, and consequently its value (Smith, 1980). Speci?cally, working capital investment involves a trade off between pro?tability and risk. Decisions that tend to increase pro?tability tend to increase risk, and conversely, decisions that focus on risk reduction will tend to reduce potential pro?tability. Gitman (1974) argued that the cash conversion cycle was a key factor in working capital management. Actually, decisions about how much to invest in the customer and inventory accounts, and how much credit to accept from suppliers, are re?ected in the ?rm’s cash conversion cycle, which represents the average number of days between the date when the ?rm must start paying its suppliers and the date when it begins to collect payments from its Financial support from Fundacio ′n Caja Murcia is gratefully acknowledged. customers. Previous studies have used measures based on the cash conversion cycle to analyze whether shortening this cycle has positive or negative effects on the ?rm’s pro?tability. Empirical evidence relating working ca
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