Enterprise working capital management: towards a study of the issue

Abstract

Problem. Working capital is a sufficiently well-studied topic; however, the information about it requires generalization. Therefore, the purpose of this article is to examine the main aspects of working capital management and its impact on the financial condition of enterprises, as well as to formalize and generalize information about enterprise working capital and its management. Methodology. The research methods include the study of scientific research, monographs, and other works by both Russian and foreign scholars. Research Results. The main elements of enterprise working capital management are considered: inventory, accounts receivable, cash, and accounts payable. The importance of maintaining them at an optimal level is emphasized. Risks that may arise from excessive changes in these elements are identified, and a number of tools that can be used to influence these working capital management elements to maintain it at an acceptable level for the enterprise are listed. The difference between two existing working capital concepts is indicated: Gross Working Capital (GWC) and Net Working Capital (NWC). Indicators reflecting working capital efficiency are highlighted, including its turnover, the duration of the financial cycle, and indicators of the enterprise's business activity – the turnover periods of inventory, accounts receivable, and accounts payable – and formulas for their calculation are provided. The main aspects of enterprise working capital management are identified: cash in transit, processing costs, and the working capital cycle. The necessity of tracking the working capital level in the process of enterprise management and the importance of managing it and its components have been proven. Practical Application. This review article can be used by researchers as a source of systematized information about working capital and how its amount can be influenced by affecting its management elements: inventory, accounts receivable, cash, and accounts payable. The article can help in choosing directions for future research and can also be used for educational purposes.