Naslov
Liquidity management in small and medium sized entities

Autori
Dečman, Nikolina ; Sever, Ivana

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
6th International Conference of the School of Economics and Business: Beyond the Economic Crisis: Lessons Learned and Challenges Ahead. / - Sarajevo : Ekonomski fakultet Univerziteta u Sarajevu, 2012, 685-693

ISBN
978-9958-25-077-4

Skup
Beyond the Economic Crisis: Lessons Learned and Challenges Ahead

Mjesto i datum
Sarajevo, Bosna i Hercegovina, 12.10.2012. - 13.10.2012

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
liquidity; working capital management; SMEs

Sažetak
Regardless the entities size, the main task of management is a successful business management. However, there are some differences in the organizational structure of entities that are dependent on their size: large, medium or small entity. Small and medium entities (SMEs) are usually characterized by a high proportion of current assets in total assets ; they are less liquid, exposed to high volatility of cash flows and mostly rely on short-term debt. This is the reason why the cash flow management and the reducing a need for working capital is important component of overall financial management of SMEs. SMEs often think in terms of cash basis rather than in terms of accrual basis. Respecting the fact that liquidity is a basic assumption of performing business for an unlimited period, information about cash flows is especially interesting not only for their owners but also for other interested parties. Among different methods and techniques for liquidity management, one method specially excels – method of working capital management which is the subject of this research paper. In a corporative management literature, focus is often put on long term financial decisions (investment decisions, capital structure, dividend policy, etc.). On the other hand, insufficiently attention has been put on short-term decisions (asset structure, relation between current asset and current liabilities). This kind of decisions is often even more important for SMEs, especially nowadays in the period of economic crises that reflects on all economic subjects. Consequently, rational management with current assets and current liabilities becomes an imperative, taking into account that optimal level of working capital insures higher profitability. Goals of this research paper can be defined as identifying factors of working capital management in small and medium-sized entities, identifying what methods and techniques small and medium-sized entities use to manage their liquidity and to analyze interdependence between working capital management and profitability of SMEs. Following methods will be used for this research: analytic method, synthetic method, induction method, deduction method, classification method and other appropriate research methods. SMEs are less effective in working capital management, notably because of their weaker power to negotiate in establishing business relations with suppliers and defining terms of payment. Furthermore, they have difficult access to alternative forms of short term sources and they are not in a position to demand cash charge for sold products. Bearing that in mind, results of this research could help SMEs to manage working capital more efficiently which can indirectly influence their profitability.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

Napomena
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