Defined strategies for financial working capital management

Abstract

Purpose

The purpose of this paper is to develop strategies for financial working capital management and to present previous literature on financial working capital management and its measures.

Design/methodology/approach

Qualitative comparative analysis is used to formulate the strategies, and the variables in the analysis have been selected from previous literature. Empirical data consists of 91 companies listed in the Helsinki Stock Exchange during 2008-2012.

Findings

The results indicate 11 possible strategies for financial working capital management which all aim at increasing financial working capital. There are suitable strategies for all companies independent from their profitability, capital intensity or working capital requirements.

Research limitations/implications

The presented strategies have been created theoretically and have not been tested in companies, which could be done in future research.

Originality/value

This study has three contributions. First, previous literature on financial working capital management is reviewed. Second, a novel measure for financial working capital is developed. Third, strategies for financial working capital management are presented.

Citation

Talonpoika, A.-M., Kärri, T., Pirttilä, M. and Monto, S. (2016), "Defined strategies for financial working capital management", International Journal of Managerial Finance, Vol. 12 No. 3, pp. 277-294. https://doi.org/10.1108/IJMF-11-2014-0178