Percepción de los usuarios de la bicicleta en relación a las políticas públicas en el Estado de Puebla.

The objective of this study was to explore (1) if WCM has effect on the profitability of Dutch companies, and (2) whether the economic crisis caused Dutch companies to improve their WCM policy and therefore cause a change in the WCM-profitability relationship. The investigation was conducted by using a data sample of 80 Dutch companies registered on the Dutch stock exchange over a time span of six years (2004-2009). The sample was divided into (1) the period of the pre-crisis (from the beginning of 2004 until the end of 2006), and (2) the period of the crisis itself (from the beginning of 2007 until the end of 2009). Return on investment and Gross profit margin were used as measures of profitability, and the number of days inventories, accounts receivable and accounts payable were used as measures of working capital management.

In contrast to previous studies (Deloof, 2003; Shin and Soenen, 1998; Jose and Lancaster, 1996) on the WCM-profitability relationship this study introduces the lenient and strict WCM concepts, and allows a better understanding of the fact that the financial condition of a company determines which concept is the best to use, with each concept showing a different relationship with profitability. Based on this knowledge it can be expected that the way in which working capital is managed will have a significant impact on the profitability of companies. Based on what the results have shown it can be determined that any measure of profitability has its own association with WCM. Deloof (2003) used gross operating income as a measure for profitability, and found out that it has a significant negative association with the number of days accounts receivable, inventories and accounts payable of Belgium companies. Deloof (2003) explains these results by implying that when the number of days accounts receivable and inventories are reduced to a reasonable minimum profitability will increase, and less profitable companies wait longer to pay their bills.

The findings of this paper show that in the period of the pre-crisis, when ROI is used as a measure of profitability there is (1) a statistically insignificant negative association between the number of days inventories and profitability, (2) a statistically insignificant positive association between the number of days accounts receivable and profitability, and (3) a statistically significant negative association between the number of days accounts payable and profitability. During the crisis the findings indicate that (1) the association between the number of days inventories and profitability turn from a statistically insignificant negative association to a statistically insignificant positive association, (2) the association between the number of days accounts receivable and profitability turn from a statistically insignificant

November; 2010 44 positive association to a statistically significant positive association, and (3) the association between the number of days accounts payable and profitability was more negative during the crisis. These findings suggest that during the crisis companies offered their customers more time to meet their payment obligations, which caused the profitability of companies to increase. This result adds to the existing literature , indicating that in times of financial instability companies will probably change their credit management policy from strict to lenient, resulting in an increase of profitability. Nevertheless it is logical that only the companies that are in a favorable financial position, will probably be able to extend the credit terms of their customers. Furthermore the results show that during the crisis companies accelerated payments to suppliers, which means that companies generated enough revenue to settle for their short-term payment obligations. This approximate implies that profitability affects accounts payable and not vice versa, because it could be assumed that companies which are in a good financial position are able to pay their bills fast.

During the crisis when ROI was replaced by GPM, the findings reveal that the association between the number of days inventories and profitability is statistically significant, but less positive compared to the pre-crisis period, which may include that as a result of declining sales, companies held more inventory in storage, which led to decreasing profits. With GPM as a measure of profitability the association between the number of days accounts receivable and profitability is more negative during the crisis, which indicates that fast collection of accounts receivable is correlated with high profitability. This shows that companies can improve profitability by reducing the credit period granted to their customers. The association between the number of days accounts payable and GPM is more positive during the crisis, and also statistically significant. This could probably indicate that when companies delay payment to suppliers it causes profitability to increase. The results also reveal that compared to the pre- crisis period, during the crisis the association between the number of days accounts payable and profitability is less positive, which suggests that beside the positive association it cannot be denied that during the crisis companies had the urge to accelerate payment to their suppliers, resulting in the fact that profit went down.

The above leads to the conclusion that the results of this paper are mixed. The reason is that there are two different profitability measures used as dependent variables in the regression models. Therefore the profitability measures determine for a large part how the results turn out.

November; 2010 45 Based on the result can be stated that less profitable companies pursue a decrease of their accounts receivables, and that companies in a more profitable position are able to grant their customers longer trade credit terms. Therefore can be concluded that on the one hand decreasing accounts receivable will increase profitability, and on the other hand increasing accounts receivable will increase profitability. So companies that are financially stable can use their privileged position in times of economic crises, by extending the credit terms of their customers with the underlying idea to spur on sales and in the end increase profitability. The association between the number of days accounts payable and profitability suggests that less profitable companies wait longer to pay their bills, and it also suggests that during the crisis companies (financially stable or not) had the urge to accelerate payment to suppliers, probably because they got discounts. Finally the result suggests that a sudden drop in sales accompanied with the mismanagement of inventory will lead to difficult access to capital at the expense of profitable operations.

By taking all findings into consideration, it becomes transparent that working capital management is a complex concept, and that managers can create profit for their companies by keeping each component (accounts receivable, accounts payable and inventory) of working capital management at an optimum level.

Limitations

Working capital management policies in other countries might point in the opposite direction than the policies utilized in the Netherlands. So due to the small data sample of 80 Dutch companies, the findings of this paper can only be attributed to this specific group of companies, and it should not be assumed that the findings are applicable to companies in general.

Future research

For future research it would be interesting to link working capital management to earnings management. Both working capital management and earnings management are related to accruals. Earnings management will probably be related to high levels of accruals and working capital management to low levels of accruals. So it would be interesting to examine the effect of working capital management on earnings management during the period of the economic crisis.

November; 2010 46