DETERMINANTS OF ACCOUNTS RECEIVABLE LEVEL: PORTFOLIO APPROACH IN FIRM'S TRADE CREDIT POLICY

Grzegorz Marek Michalski ()

Acta Oeconomica Pragensia, 2008, vol. 2008, issue 5, pages 47-56

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.

Keywords: value based management; trade credit management; portfolio analysis; incremental analysis; accounts receivable (search for similar items in EconPapers)
JEL-codes: G32 P33 P34 (search for similar items in EconPapers)
Date: 2008
View list of references

Downloads: (external link)
http://www.vse.cz/polek/download.php?jnl=aop&pdf=161.pdf (application/pdf)
http://www.vse.cz/aop/abstrakt.php3?IDcl=161 (text/html)
free of charge, full text delayed 1 year

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:161:p:47-56

Ordering information: This journal article can be ordered from
Redakce Acta Oeconomica Pragensia, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3
http://www.vse.cz/aop/

Access Statistics for this article

Acta Oeconomica Pragensia is edited by Markéta Arltová

More articles in Acta Oeconomica Pragensia from University of Economics, Prague
Contact information at EDIRC.
Series data maintained by Vaclav Subrta ().