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A Further Look at Working Capital Optimization in Medium-Sized Firms: Concepts and Evidence

A Further Look at Working Capital Optimization in Medium-Sized Firms: Concepts and Evidence
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Author(s): Milan B. Vemić (Higher School of Academic Studies “DOSITEJ”, Serbia)
Copyright: 2017
Pages: 34
Source title: Optimal Management Strategies in Small and Medium Enterprises
Source Author(s)/Editor(s): Milan B. Vemić (Higher School of Academic Studies “DOSITEJ”, Serbia)
DOI: 10.4018/978-1-5225-1949-2.ch008

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Abstract

SMEs battling with financial volatility require financial and business ambidexterity. To them working capital optimization is one partial solution to improve performance. Examined concepts will not develop a spectacular model but rather quantitatively - qualitatively upgrade existing theories. The treatise will demonstrate that in stochastic working capital decisions important are varieties of alternatives. A structural model of working capital optimization is developed with practical examples for financial decision making under uncertainty. Emphasis will be placed on structuring management problems with the analysis of preferences using probability tools. Additional light is shed on coupling static and dynamic indicators, systemically approaching inventory and cash management, sales and purchasing, costs and profitability. Working capital optimization can contribute to management of financial risk and have an overall impact in medium sized enterprises. Conclusions and recommendations will aim to contribute to the overall body of knowledge on optimized financial decision making.

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