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Optimal Working Capital Policies: A Chance-Constrained Programming Approach

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  • Merville, L. J.
  • Tavis, L. A.

Abstract

The current assets and current liabilities of a firm are the stock reflections of closely interrelated operational and financial cash flows. The net effect of these combined flows must be recognized in searching for the optimal credit, inventory, or short-term borrowing policies. Yet, the vast majority of models for short-term investment and borrowing decisions do not allow for the interrelationships of this system.

Suggested Citation

  • Merville, L. J. & Tavis, L. A., 1973. "Optimal Working Capital Policies: A Chance-Constrained Programming Approach," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(1), pages 47-59, January.
    • Handle: RePEc:cup:jfinqa:v:8:y:1973:i:01:p:47-59_01
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    Cited by:

    1. Chen, Tsung-Kang & Liao, Hsien-Hsing & Kuo, Hui-Ju & Hsieh, Yu-Ling, 2013. "Suppliers’ and customers’ information asymmetry and corporate bond yield spreads," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 3181-3191.
    2. Enqvist, Julius & Graham, Michael & Nikkinen, Jussi, 2014. "The impact of working capital management on firm profitability in different business cycles: Evidence from Finland," Research in International Business and Finance, Elsevier, vol. 32(C), pages 36-49.
    3. Gary W. Emery, 1982. "Optimal Liquidity Policy: A Stochastic Process Approach," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(3), pages 273-283, September.
    4. Zeidan, Rodrigo & Shapir, Offer Moshe, 2017. "Cash conversion cycle and value-enhancing operations: Theory and evidence for a free lunch," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 203-219.

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