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Advanced model for working capital management: bridging theory and practice

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  • Sari Viskari
  • Anita Ruokola
  • Miia Pirttilä
  • Timo Kärri

Abstract

The paper introduces an internal information tool, the advanced cash conversion cycle (ACCC), for controlling the amount and cost of working capital, by refining and extending the concept of the weighted cash conversion cycle. The ACCC model has been developed with a real world value chain case from the pulp and paper industry, and it addresses issues overlooked in the prior model. The ACCC offers visibility through the value chain, elimination of the problem of a negative margin, a more simple calculation of accounts payables compared to the prior model, and new metrics to control working capital in companies.

Suggested Citation

  • Sari Viskari & Anita Ruokola & Miia Pirttilä & Timo Kärri, 2012. "Advanced model for working capital management: bridging theory and practice," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 1-17.
    • Handle: RePEc:ids:injams:v:4:y:2012:i:1:p:1-17
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    References listed on IDEAS

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    Cited by:

    1. Monika Bolek, 2014. "Return On Current Assets, Working Capital And Required Rate Of Return On Equity," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 10(2), pages 1-10, August.
    2. Ivakina, A. & Zenkevich, N., 2018. "Working capital optimization under liquidity constraints in collaborative supply chains," Working Papers 15110, Graduate School of Management, St. Petersburg State University.
    3. Wetzel, Philipp & Hofmann, Erik, 2019. "Supply chain finance, financial constraints and corporate performance: An explorative network analysis and future research agenda," International Journal of Production Economics, Elsevier, vol. 216(C), pages 364-383.
    4. Margarita Protopappa-Sieke & Ralf W. Seifert, 2017. "Benefits of working capital sharing in supply chains," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(5), pages 521-532, May.

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