An Empirical Analysis Of The Working Capital Policy Of Chinese Listed Firms

No working capital, no company's operation. Working capital has great contact with other capital in any enterprise, permeating every sector of enterprise's production and operation. At the same time, advanced working capital management is the basic qualification to an enterprise' subsistence;the management of working capital is the fundamental of financial management. But we must rely on scientific working capital policy ensuring the realization of working capital managing aim. The paper is to research working capital policy from the relationship between it and firm's cash flow and profits angels.The paper begins with the definition of working capital and the nature of current asset and current liabilities, discuss about how much to keep in its current assets, to finance current asset with short-term funds, long-term funds, or some mixture of the two. The paper points that companies must seek a balance between liquidity and profitability and the risk. In the second chapter, it introduces the characteristics of working capital policy practicing by China companies. Also it makes an empirical analysis to the relationship between current assets ratio and firm's performances;current assets ratio and firm value;current liabilities ratio and firm's performances, CCC and firm's performances and firm value. According to the detailed account in item management of working capital and the structure management of working capital and the empirical analysis results in the fourth chapter, in the last chapter, we give some advice to the establishment of working capital policy. It can improve the speed of working capital turnover, reducing the occupancy of capital and the cost of short capital. It also stresses the zero working capital policy in order to bring some references to the working capital management theory and practice.