The influence factors of the working capital management

[abstract] a enterprise to maintain the normal operation must have adequate amount of operating funds, operating funds for production and marketing activities in the enterprise in the important position, to achieve the goal of corporate profits may have a significant influence, working capital enterprise management is an important part of financial management, so should strengthen the analysis of the working capital.

[key words] operating funds profitability liquidity risk

Working capital in the production management enterprise is in the process of the capital turnover use, can also understand for enterprises in the production and business operation process flow of use net assets. In the number equal to all current assets minus liabilities all the balance after the current assets is an integral part of their. So the characteristics of working capital is liquidity characteristics, that is, is short; With liquidity; A variety of forms and the number of coexist volatility.

In the current assets, liabilities from the part of the short-term demand by the constraints of the right, and enterprise cannot, in a relatively short period of free use. Instead, after deducting liabilities of current assets, the enterprise can be in a long period, the free use. For this part of the net current assets by long-term financing way to raise, it make debt right time pressure small.

Working capital is not only current assets and liabilities the difference between the two, and the scale of production and sales by enterprise for effect, and restricting enterprise and the scale of production and operation. So, working capital management can't simply consider current assets and comparing of current liabilities, and need enterprise capital movement from the whole process of the system master.

Operating funds is an organic part of the current assets, is the enterprise is an important symbol of short-term debt paying ability. Generally, the greater the amount of working capital, enterprise short-term debt paying ability is strong, and then is small. Therefore, to increase the size of the working capital, is to reduce the risk of debt service enterprise important guarantee. However, the scale of working capital increase, the inevitable requirement of long-term financing way to raise enterprise more long-term capital that takes up in liquid assets, but the long-term financing ways to raise the cost of capital for big, can affect the enterprise profit ability, in the long run, finally because low profitability, influence debt paying ability, and brings to the enterprise financial risk. Conversely, the small scale of the working capital, of the financial risks of enterprise is high, and the enterprise profitability. At the same time, working capital structure is different, also can affect the enterprise debt paying ability and profitability. Therefore, to determine the size of the working capital, the working capital management, must be in profitability, financial risk tradeoff between them. Visible, to operating funds for the management, and must be from four content:

A, financial risk

In theory, as long as current assets greater than the current liabilities, the enterprise has the short-term debt paying ability. Therefore, the enterprise working capital between the lowest for 0. But it must be in cash flow of the assets of the quantity and maturity structure of debt repayment with flow quantity and maturity structure perfectly for the premise, otherwise, the enterprise may form the risk of debt when it matures. Theoretically, appear in the enterprise financial risk, long-term assets can be sold to repay the debt maturity. However, in practice the enterprise in order to maintain normal production and operation activities, generally not use long-term assets to repay current liabilities. Moreover, because of the current assets sold quantity also have great uncertainty, this is mainly accounts receivable bad debt and stock price possibility exists, so the number of current assets of the enterprise must be greater than the current liabilities, that is, the number of operating funds must be greater than zero. At the same time, because of all kinds of current assets liquidation of speed and liquidation amount of different, as current assets of net working capital structure is different, its debt paying ability is different, accordingly, of the financial risk of the enterprise to different attitude, the requirement of working capital structure is different.

Second, profitability

If the enterprise simply consider debt service and determine the scale and structure of working capital, will naturally bound their flexible, mobile use operating funds, affect the enterprise profit. Because an enterprise's solvency and profitability of mutual results, so, if an enterprise's profit level low for a long time, finally will weaken their debt paying ability, thus brings to the enterprise itself financial risk. Enterprise profitability is subject to income and cost two factors, enterprise operating funds the scale and structure of different, income and cost of different level. If an enterprise operating funds of large, can increase working capital flow of the assets of the nonprofit scale and proportion, less enterprise income, but also increase the capital cost and opportunity cost. Conversely, enterprise should according to their own profits target, to determine the scale and structure of working capital.

Three, elastic

Because of the elastic in financial management of the important role of, so in working capital to consider their own transformation in the management of the possibility, in order to need, adjust the structure of working capital. The actual management, elastic will affect the size of the working capital, if the existing operating funds flexibility is not good, and need for working capital structure adjustment, face this kind of situation enterprise have two choices: the first choice is to sacrifice credit and earnings, will give the smaller operating funds to convert its form; The second option is to increase elastic working capital scale, used to prepare short term debt payments and financial adjustment, this will increase the cost of capital for companies, reduce returns, maintain the enterprise existing credit.

Four, operation ability

Business is business operation, operation ability is to show enterprise operating ability. Special understanding is the enterprise operating speed, main performance for asset management and use of efficiency, namely, the turnover of assets, commonly used in financial analysis of the assets of the turnover to said, mainly including flow asset turnover, fixed asset turnover and total asset turnover ratio index.

Enterprise's profit ability and solvency is related to the survival and development of enterprise important questions. No profit ability enterprise cannot development, if no debt paying ability enterprise even unable to safeguard the survival. Therefore, for larger profitability and enough debt paying ability is an important content of the working capital management, is also the financial management, and even the entire enterprise management of the main goal. Keep operating funds have some flexibility, it is to implement the financial policy foundation, if, operating funds maintained a rigid, without flexibility, financial management many of the major measures to be unenforceable, financial policy cannot implement, financial management goal will not be achieved. If from keeping the final purpose of elastic operating funds to see is also in order to improve enterprise profitability and keep enough solvency, operation ability is the enterprise sales, production, and purchasing ability, as well as three of the ability of coordination degree combined. Therefore, operation ability and not enterprise financial management ability, but an enterprise to manufacture management activity ability. But not if the three ability or the three ability not harmonious, was also far from the enterprise's financial management. Say so, keep operating funds be elastic and have larger operation ability is a financial management foundation.

Working capital scale is affected by the financial risk of the enterprise, profitability, operation ability and the flexibility of the funds that decision. If consider reducing of the financial risks of enterprise requirements, working capital scale is the better; If consider raising enterprise profitability factors, working capital scale is smaller may be more beautiful; If considering to adjust the capital structure, keep the funds have enough flexibility, flexible operating funds scale the bigger the better