Working Capital Management in Stainless Steel Industry: Case AvestaPolarit Oy
Tourunen, Lasse (2004)
Kuvaus
Kokotekstiversiota ei ole saatavissa.
Tiivistelmä
The primary objective for this study was to create benchmark information concerning the case company AvestaPolarit’s and its competitors’ working capital levels, where the main focus was placed on inventory performance. Also, a deeper analysis was carried out concerning AvestaPolarit’s working capital levels, whether they included slack resources, and the reasons behind the case company’s working capital levels.
Working capital signifies to the current assets of the firm, items that can be converted into cash within a year. The main concept of the management of working capital is its circulating nature. Therefore, the study applies cash conversion cycle, similar to Jose, Lancaster and Stevens (1996), and its components as benchmark measures. Data for the study is derived from the official consolidated financial statements. However, the study does not concern itself just with the numerical benchmark results. Recognition of the operational roots of the financial results were disclosed by making assumptions based on the public information, such as annual reports and scientific literature, and by interviewing executive management and other key managers of AvestaPolarit.
Benchmark results indicate that during the research period AvestaPolarit has outperformed many of its closest competitors in the managing of its working capital. Greatest proportion of AvestaPolarit’s working capital is tied in to the inventories. Differences exist in the working capital levels between companies and industries. These differences are partly explained by the industrial characteristics, but also inefficiencies in the management of working capital can be found. The study also indicates that AvestaPolarit’s working capital levels have increased during the research period, which is the opposite, compared to the other companies’ decreased working capital levels. This is mostly explained by AvestaPolarit’s investment and restructuring operations.
Working capital signifies to the current assets of the firm, items that can be converted into cash within a year. The main concept of the management of working capital is its circulating nature. Therefore, the study applies cash conversion cycle, similar to Jose, Lancaster and Stevens (1996), and its components as benchmark measures. Data for the study is derived from the official consolidated financial statements. However, the study does not concern itself just with the numerical benchmark results. Recognition of the operational roots of the financial results were disclosed by making assumptions based on the public information, such as annual reports and scientific literature, and by interviewing executive management and other key managers of AvestaPolarit.
Benchmark results indicate that during the research period AvestaPolarit has outperformed many of its closest competitors in the managing of its working capital. Greatest proportion of AvestaPolarit’s working capital is tied in to the inventories. Differences exist in the working capital levels between companies and industries. These differences are partly explained by the industrial characteristics, but also inefficiencies in the management of working capital can be found. The study also indicates that AvestaPolarit’s working capital levels have increased during the research period, which is the opposite, compared to the other companies’ decreased working capital levels. This is mostly explained by AvestaPolarit’s investment and restructuring operations.