Advanced Search
MyIDEAS: Login

Portfolio Management Approach in Trade Credit Decision Making

Contents:

Author Info

  • Grzegorz Michalski

Abstract

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 profitbased models could be lacking in what relates to another aim (i.e., 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. 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, special attention was paid to adapting assumptions from portfolio theory as well as gauging the potential effect on the firm value.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://arxiv.org/pdf/1301.3823
File Function: Latest version
Download Restriction: no

Bibliographic Info

Paper provided by arXiv.org in its series Papers with number 1301.3823.

as in new window
Length:
Date of creation: Jan 2013
Date of revision:
Publication status: Published in Romanian Journal of Economic Forecasting, 3, 2007, 42-53
Handle: RePEc:arx:papers:1301.3823

Contact details of provider:
Web page: http://arxiv.org/

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Karolina Biernacka, 2013. "Krótkoterminowe planowanie finansowe na przykładzie przedsiębiorstwa z branży budowlanej," Working Papers hal-00804617, HAL.
  2. Monika Hurna & Kwiecień Krzysztof, 2013. "Zarządzanie wartością przedsiębiorstwa na przykładzie przedsiębiorstw z branży wydobywczej," Working Papers hal-00804798, HAL.
  3. Aneta Hutta, 2013. "Zarzadzanie ryzykiem w tworzeniu wartosci na przykladzie przedsiebiorstwa zbranzy spozywczej (Risk Management in Creating Value in the Example of Companies from the Food Production Branch)," Working Papers hal-00811906, HAL.
  4. Karolina Karcz & Malwina Bielawska, 2013. "Planowanie przychodów ze sprzedaży na przykładzie przedsiębiorstwa z branży sprzedaż hurtowa napojów alkoholowych ( PKD 46.34A) oraz z branży sprzedaż hurtowa artykułów elektrycznych użytk," Working Papers hal-00814297, HAL.
  5. Michal Pilecki, 2013. "Zarządzanie Ryzykiem W Tworzeniu Wartości Na Przykładzie Przedsiębiorstwa Z Branży Spożywczej---Risk Managment in Creating Value of Company in Example of Food Production Branch Companies," Working Papers hal-00811907, HAL.
  6. Monika Brzezińska & Katarzyna Guhn, 2013. "Planning of sales on the example of companies in the paper industry and wholesale of chemical products," Working Papers hal-00812840, HAL.
  7. Grzegorz Michalski, 2013. "Planning Optimal From the Firm Value Creation Perspective Levels of Operating Cash Investments," Papers 1301.3824, arXiv.org.
  8. Michalski, Grzegorz, 2012. "Risk sensitivity indicator as correction factor for cost of capital rate," MPRA Paper 43399, University Library of Munich, Germany, revised 02 Sep 2012.
  9. Aneta Hutta & Michal Pilecki, 2013. "A. Hutta, M. Pilecki, Uniwersytet Ekonomiczny we Wrocławiu, Zarzadzanie wartoscia przedsiebiorstwa na przykładzie przedsiebiorstw z branzy spozywczej," Working Papers hal-00804861, HAL.
  10. Karolina Biernacka & Jolanta Lont, 2013. "Prognoza przyszłorocznej sprzedaży dla przedsiębiorstw z branży budowlanej i medycznej," Working Papers hal-00804616, HAL.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:arx:papers:1301.3823. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.