IDEAS home Printed from https://ideas.repec.org/a/prg/jnlaop/v2008y2008i5id161p47-56.html
   My bibliography  Save this article

Determinants of Accounts Receivable Level: Portfolio Approach in Firm's Trade Credit Policy

Author

Listed:
  • Grzegorz Michalski

Abstract

Trade credit management should contribute to realization of basic financial purpose of an enterprise which is the is maximization of its value. 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. 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.

Suggested Citation

  • Grzegorz Michalski, 2008. "Determinants of Accounts Receivable Level: Portfolio Approach in Firm's Trade Credit Policy," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2008(5), pages 47-56.
  • Handle: RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:161:p:47-56
    as

    Download full text from publisher

    File URL: http://www.vse.cz/polek/download.php?jnl=aop&pdf=161.pdf
    Download Restriction: free of charge

    File URL: http://www.vse.cz/aop/161
    Download Restriction: free of charge

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Mary Nelima LYANI (SINDANI) & Gregory S. NAMUSONGE & Maurice SAKWA, 2016. "Accounts Receivable Risk Management Practices and Growth of SMEs in Kakamega County, Kenya," Expert Journal of Finance, Sprint Investify, vol. 4, pages 31-43.

    More about this item

    Keywords

    accounts receivable; trade credit management; incremental analysis; value based management; portfolio analysis;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:161:p:47-56. 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: (Frantisek Sokolovsky). General contact details of provider: http://edirc.repec.org/data/uevsecz.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.