The Research Of Working Capital Management Policy Based On Enterprise Life Cycle Theory

Excellence in working capital management is necessary for an enterpriseto alive, develop, and carry out company strategy. Working capitalefficiency relies on proper working capital policy. There are many factors toimpact on working capital policy. Among these factors, enterprise life cycleis one of the important as both company short term target and long termstrategy are based on the risk and benefit level in different life cycle stages.This paper describes the concepts of enterprise life cycle and workingcapital management. It explores how to balance working capitalmanagement efficiency with enterprise risk and benefit level, as well astypes of working capital policy. The author selects listed companies fromfood & beverage industry and information technology industry as sample,analyzes their current assets and current liabilities financing data and getsthe general pattern of working capital management policy for companies indifferent life cycle stages. That is to say, the companies in neonatal &growth stage to adopt more cautious type of working capital policy, andthose in mature stage to adopt a moderate policy with lower current assetwith lower current liability, and those in recession businesses to use amoderate policy with both higher.The innovation of this paper is to combine the risk, benefit level indifferent life cycle stages with working capital effect together, and get the conclusion of general pattern of working capital management policy forbusiness managers'reference.