The Effects of The Great Recession On Corporate Working Capital Management Practices was written by two professors of the Southeastern Louisiana University, USA; Dr. Rakesh Duggal and Dr. Michael C. Budden. It was published in July 2012 in the International Business & Economics Research Journal, Volume 11, Number 7. The Source of this article is the website of The Clute Institute (https://www.cluteinstitute.com/).
This article studied the financial situation of firms in a definite economic situation; the recession. It develops on the financing processes of the companies and how they are affected by this concerned economic situation.
In order to well study this article, we need to define the key words concerning the subject.
* The Net working capital is the part of current assets which is financed with long-term funds. The NWC helps in measuring the liquidity of the firm. The NWC is needed according to the non synchronous nature cash. In other words.
In general, cash outflows are quite expected and refer to payment of current liabilities, whereas cash inflows are more difficult to predict. The NWC is less required when cash inflows are predictable.
* Working capital management is concerned by determining the financing of a firm through the management of current assets, current liabilities and the interrelationship that exists between them in such a way that a satisfactory level of working capital is maintained.
* Current assets refer to the possessions of the firm which can be converted into cash within one year without undergoing a decrease in value and without upsetting the operations of the firm.
The major current assets are cash, marketable securities, accounts receivable and inventory.
* Current liabilities are those liabilities which are planned to be paid at their start in the ordinary course of business, within a year, out of the current assets or their earnings.
The basics current liabilities are accounts payable, bills...