Working Capital Management Strategy In Each Period Of Enterprise Life Cycle And The Impact On The Performance Research

Working capital has a crucial influence on the development of enterprises, and It is difficult for enterprises to choose appropriate working capital policy. On one hand, there were obvious differences between operators and managers. Also there existed differences among their expectation to working capital management. On the other hand, the enterprises should adopt different, working capital management strategies in different enterprise life cycle period.Some enterprises sank in financial crisis in the high-speed development because of failure to working capital management strategy. Enterprise’s daily business activities needed to have the corresponding working capital to supply. It is meaningful to recognize the life cycle period of enterprises and help enterprises choose the corresponding working capital management strategy.According to the background of research, this article took the relevant financial data of manufacturing industry during the past fifteen years. Fistly, this article adopted the modified exponential model to judge the corporate life cycle period. Secondly, this article adopted the current asset ratio and current liabilities ratio to recognize the working capital management at different corporate life cycle period. At last, this article established the regression model to study the influence of working capital management strategy for performance.The study suggests that, most of manufacturing industry of our country is in growing period or maturity period. In practical management work, most sample enterprises adopted conservative and moderate policies during growing period. The enterprises adopted low conservative policy during the maturity period. The enterprises adopted high conservative policy during the degenerating period. The enterprises adopted low conservative policy during the seceding period. From the view of operators,, the enterprise can get higher return on capital of working capital management strategy in turn as follows:growing period with low conservative policy, maturity period with moderate policy, degenerating period with high conservative policy. From the view of investors, in the hope that working capital management strategy adopted by enterprises in turn as follows:growing period with moderate policy, maturity period with radical policy, degenerating period with radical policy. This article did further analysis on the radical degree of working capital management strategy adopted at each period. And we get conclusion that for managers, capital management strategy adopted by most of the current enterprise is too conservative in growing period, too aggressive in other period. For investors,the working capital management strategy adopted by most of the current enterprise is too radical in growing period, is too conservative in other period. Managers and investors prefered just the opposite degree of aggressive on working capital policies.