Working Capital Management : A Study of Finnish Manufacturing SMEs’ Working Capital Management
Danish, Jawid (2025)
2025
All rights reserved. This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025111327884
https://urn.fi/URN:NBN:fi:amk-2025111327884
Tiivistelmä
This thesis develops size-adjusted benchmarks for core working capital indicators in Finnish manufacturing (2021-2023) and tests whether average levels vary by firm size focusing mainly on SMEs.
Firms are grouped into five turnover bands (€10-15m, €15-30m, €30-50m, €50- 100m, €100m-€1bn); each group contributes a three-year average to reflect typical practice. One-way ANOVA examines differences in Days Sales Outstanding (DSO), Days Payables Outstanding (DPO), Days Inventory aOutstanding (DIO), the Cash Conversion Cycle (CCC), and Net Operating Working Capital as a share of sales (NOWC%).
Results show no size effect on DSO, while DPO is longer and DIO is lower for larger firms. These components shorten CCC and reduce NOWC% as firms grow. When viewed together, the net trade-credit interval (DSO - DPO) is negative across all groups and becomes more negative with size, complementing the inventory effect that drives shorter cycles.
This thesis offers size-aware, sector-specific benchmarks and a practical interpretation: inventory policy is the most influential factor, payables management provides a secondary support mechanism within agreed terms, and receivables discipline functions more as hygiene than as a cross-band differentiator in this period.
The design is transparent and non-causal; groups are unbalanced because SMEs outnumber larger firms, and decisions are based on broad p-value thresholds. Limitations and straightforward extensions (e.g., sub-industry stratification, sensitivity checks) are acknowledged without altering the core message.
Firms are grouped into five turnover bands (€10-15m, €15-30m, €30-50m, €50- 100m, €100m-€1bn); each group contributes a three-year average to reflect typical practice. One-way ANOVA examines differences in Days Sales Outstanding (DSO), Days Payables Outstanding (DPO), Days Inventory aOutstanding (DIO), the Cash Conversion Cycle (CCC), and Net Operating Working Capital as a share of sales (NOWC%).
Results show no size effect on DSO, while DPO is longer and DIO is lower for larger firms. These components shorten CCC and reduce NOWC% as firms grow. When viewed together, the net trade-credit interval (DSO - DPO) is negative across all groups and becomes more negative with size, complementing the inventory effect that drives shorter cycles.
This thesis offers size-aware, sector-specific benchmarks and a practical interpretation: inventory policy is the most influential factor, payables management provides a secondary support mechanism within agreed terms, and receivables discipline functions more as hygiene than as a cross-band differentiator in this period.
The design is transparent and non-causal; groups are unbalanced because SMEs outnumber larger firms, and decisions are based on broad p-value thresholds. Limitations and straightforward extensions (e.g., sub-industry stratification, sensitivity checks) are acknowledged without altering the core message.