Study On The Working Capital Structure Of The Small And Medium-Sized Enterprises Of China

As an important financial resource of company, the in vestment of working capital not only sets a foundation for realizing corporate value, but also has a direct influence on corporate value. However, evidences from related research prove that there is no enough focus on working capital practice from management. Most of our companies do not have explicit aim of working capital structure, don not stable working capital policy, it is surely disadvantaged to the firms.Based on the condition mentioned above, this paper analyzes some determinants of working capital like industry characteristics, scale, profits and cash flow so as to provide some guide for controlling the working capital for practitioners.In the second part, 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, discuss about the working capital policy, analyze the function of working capital in the finance angel.The study chooses 119 companies listed in the plate of small and medium-sized enterprises in the Shenzhen stock exchange, based on the financing data of the year of 2001 to 2006. Then, the paper gives a descriptive analysis of the situation of working capital practicing of these small and medium-sized enterprises in China during these years. 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 performance. The conclusion is that the working capital structure of our small and medium-sized enterprises are worse than that of big companies both in China and other countries.Then, firstly, using the one-way analysis of variance method to analyze if trade factor influence working capital structure. The conclusion proves the trade factor is widely existing and effecting. Secondly, based on the group carved up, we put forward the empirical analysis of the determinants of working capital structure. We find that the working capital structure of Chinese firms is highly related to the scale and cash flow, while little related to the profits.The last part is conclusions. After combining conclusions from other related research and this paper, we make some suggestions to improve the management of working capital of the small and medium-sized enterprises. Finally, make some explain about the analysis limitations of this paper.