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- Title
THE STRATEGIC DETERMINANTS OF WORKING CAPITAL: A PRODUCT-LINE PERSPECTIVE.
- Authors
Nunn Jr., Kenneth P.
- Abstract
This article focuses on strategic determinants of working capital in the U.S. As corporations have grown larger and more diversified, the effective management of working capital at the product-line level has become increasingly important. This study takes such an approach utilizing the Strategic Planning Institute's Profit Impact of Market Strategy (PIMS) data base, a unique cross-sectional resource, assembled from product-line businesses in many different industries. In examining working capital, a cross-sectional approach was applied, using the PIMS data to build a multiple regression model. The model is composed of determinants designed to explain why working capital varies from one business to the next, i.e., why some product-lines have low working capital requirements and others very high ones. It was found that the businesses that are export or import oriented tend to use more working capital, as do those in concentrated industries. The major factors influencing "permanent" working capital levels are production, selling and accounting-related variables, as well as variables which reflect the business's competitive position and industry characteristics.
- Publication
Journal of Financial Research, 1981, Vol 4, Issue 3, p207
- ISSN
0270-2592
- Publication type
Academic Journal
- DOI
10.1111/j.1475-6803.1981.tb00604.x