Crisis management by working capital of the russian companies which are engaged in wholesale trade in agricultural production

Issue № 9, 2018, article № 5, pages 44-57

Section: Economic mechanism of managing

Language: Russian

Original language title: АНТИКРИЗИСНОЕ УПРАВЛЕНИЕ ОБОРОТНЫМ КАПИТАЛОМ РОССИЙСКИХ КОМПАНИЙ, ЗАНИМАЮЩИХСЯ ОПТОВОЙ ТОРГОВЛЕЙ СЕЛЬСКОХОЗЯЙСТВЕННОЙ ПРОДУКЦИЕЙ

Keywords: CRISIS MANAGEMENT, WORKING CAPITAL, WHOLESALE TRADE, AGRICULTURE, BANKRUPTCY OF THE ENTERPRISES

Abstract: Working capital management plays a significant role in improved profitability of firms. Firms can achieve optimal management of working capital by making the trade-off between profitability and liquidity. This paper analyzes the effect of working capital management on profitability and probability of bankruptcy firms in Russia. Regression models were used to establish the relationship between working capital management and firm’s profitability. The study finds a negative relationship between conversion cycle and firm’s profitability: turnover of current assets has a significant impact on the return on assets. Based on the key findings from this study it has been concluded that the management of a firm can create value for their shareholders by change in volumes of working capital. Moreover, the management can also reduce the likelihood of bankruptcy by increasing current liquidity. Firms are capable of gaining sustainable competitive advantage by means of effective and efficient utilization of working capital of the organization. In so doing, the profitability of the firms is expected to increase.

Authors: Vinogradova Olga Sergeevna, Ermakova Elena Vladimirovna