Study On Relationship Between Working Capital Management And Value Creation Ability

In the financial management of modern enterprise, the management of working capital is one of the most important part. One of the goals of enterprise financial management is to maximize the value of the enterprise. When we discuss the word "value",the most important thing for the investors is whether a enterprise creates it’s value rather than the profit. So this article wants to discuss how the enterprise should manage it’s working capital, in order to realize and improve the enterprise value creation ability, also is the enterprise realizes the profit can bring the real value for the investor.Firstly,in order to discuss the above problem, this paper makes a review and analysis a lot of articles about the management of working capital and the ability of creating enterprise’s value.And then we decide to discuss our question on the basis of the concept of net working capital, the evaluation system of working capital management and the evaluation system of enterprise’s investment and financing.After that, we find out the theoretical relationship between the management of working capital and the ability of creating enterprise’s value.Secondly, because of the impact of industry factors on the management of working capital, this paper selects the sub sectors of manufacturing industry-electronic manufacturing industry. On the basis of theoretical analysis,the index of measuring the efficiency of working capital management and the management strategy of working capital is found out,and the relevant variables are analyzed by descriptive statistics, correlation analysis, single factor analysis of variance, cluster analysis,etc.The research point out the relationship between the management of working capital and the ability of creating enterprise’s value.Finally,the empirical results show that: a.The financial activities of the working capital turnover period and the enterprise value creation ability is significantly negative correlation.The working capital overall turnover and the enterprise value creation ability is significantly negative correlation.Although other part of the turnover period about the working capital and value creation ability has negative correlation but it’s not significant.Further analysis shows that the enterprise value creation ability is the turnover period of working capital and its components Granger reasons, but only in the production channel, the turnover period of working capital is the Granger reasons to the enterprise value creation ability. Financial activities and the overall management efficiency is the Granger reasons toenterprise value creation ability. b. In the electronic manufacturing industry, the company’s net working capital allocation ratio is significantly different, but working capital management strategy between investment and financing is more matching. To realize the enterprise value creation ability, electronic manufacturing enterprises should choose the sound(in moderation) of overall working capital management strategy. And to realize the maximization of value creation ability, they need to continue to optimize the overall strategy to reach the critical point. By contrast,the working capital management level of China’s electronic manufacturing enterprises needs to be optimized.