Research Of Factors Influential To The Working Capital Policy Of Small And Medium-sized Enterprise In China

Long-term financial policy has the character of strategic significance, whichfundamentally determines the value of the business. But the working capital policy which actsas the representative of the short-term financial policy has some kind of effects with therealization of the strategic goals of long-term financial policies. Chinese scholars have paidmore attention to the study of the relationship between the long-term financial policy and thecooperation value for a long time, but the study of the working capital policy, on the otherside, is relatively few, and most of them are normative research. Manufacturing can reflect thelevel of productivity of a country. Small and medium-sized enterprises accounts for the vastmajority of the total number of enterprises in China. Empirical research of the working capitalmanagement policy for small and medium-sized manufacturing enterprises has theoretical andpractical significance.The essence of the working capital is current assets supported by a long-term capitalsource and the essence of working capital management policy is the structuring managementstrategy for the current assets and current liabilities. It can be divided into investment policyand financing policies. Design of this paper is based on the summary of relevant researchresults from home and abroad and the concluding of the basic theory and method of workingcapital management. We choose the relative data from316small board manufacturing listedcompanies in five-year from2007to2011to explore their working capital policy issues. Fromthe descriptive statistical analysis we know that the working capital policy of small andmedium-sized enterprises in china in the last five years has the following characteristics:Small and medium-sized enterprises tends to adopt a strategy of combining healthy workingcapital investment policies and aggressive working capital financing policy; Most of theenterprises have a high current liabilities proportion, that means working capital financingpolicy is more radical, and also take a greater financial risk; The efficiency of the workingcapital management is not high and it shows a downward trend.We carry on the multiple regressions by using the fixed effect model to analysis theeffects what the micro and macro factors have to the working capital policy. The study foundthat the relationship between the investment policies of working capital and asset-liabilityratio comes into the negative correlation, but the relationship between the factors such as thesales gross margin, the proportion of current liabilities, year on year revenue growth rate,strong index, dependency index and GDP growth come into the positive correlation; WorkingCapital financing policy has the negative correlation with the sales margin, asset-liability ratio,firm size, and GDP growth rate, but it has the positive correlating with the current assetsproportion, strong index and bank lending rateIsII etc.