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Influence of Components of Net Working Capital on Costs of Companies Manufacturing Machinery and Equipment in the Czech Republic

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  • Zdeněk Motlíček

    (Department of Business Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Pavlína Matějová

    (Department of Business Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Dana Martinovičová

    (Department of Business Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

The approach to working capital management significantly affects the performance of companies. Nevertheless, this effect varies depending on the observed industry and company's size and it may be assumed that it is also dependent on territory differences. The paper presents an empirical research aiming to identify particular links between net working capital and costs of the company. The outcomes indicate a relatively strong positive correlation between the variables, especially in case of inventory. Furthermore he ratio of financial costs to ordinary costs is low, as well as the impact of net working capital components on financial costs. It follows that a focus on collection period would not lead to significant savings. The findings appropriately complement Czech and foreign literature focused more on impact of net working capital or working capital on profitability indicators. Further studies concerning a more detailed analysis of the influence of net working capital on corporate costs are difficult to be found. The present research has been conducted on medium-sized companies located in the Czech Republic and manufacturing machinery and equipment. The obtained results suggest the most suitable area of focus for optimization of working capital in relation to costs for the types of companies defined above.

Suggested Citation

  • Zdeněk Motlíček & Pavlína Matějová & Dana Martinovičová, 2015. "Influence of Components of Net Working Capital on Costs of Companies Manufacturing Machinery and Equipment in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(1), pages 263-270.
    • Handle: RePEc:mup:actaun:actaun_2015063010263
    DOI: 10.11118/actaun201563010263
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    References listed on IDEAS

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