• citations in SCIndeks: 0
  • citations in CrossRef:0
  • citations in Google Scholar:[]
  • visits in previous 30 days:0
  • full-text downloads in 30 days:0


article: 9 from 9  
Back back to result list
The decision making of portfolio management approach in trade credit
aInstitute of International Politics and Economics, Belgrade
bUniversity of Belgrade, Faculty of Economy
Keywords: accounts receivable; trade credit management; incremental analysis; value-based management; portfolio analysis
The basic financial purpose of an enterprise is maximization of its value. Trade credit management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to another aim (i.e., maximization of enterprise value). The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This paper presents the consequences that can result from operating risk that is related to purchasers using payment postponement for goods and/or services. The present article offers a method that uses portfolio management theory to determine the level of accounts receivable in a firm. An increase in the level of accounts receivables in a firm increases both net working capital and the costs of holding and managing accounts receivables. Both of these decrease the value of the firm, but a liberal policy in accounts receivable coupled with the portfolio management approach could increase the value. Efforts to assign ways to manage these risks were also undertaken; among them, special attention was paid to adapting assumptions from portfolio theory as well as gauging the potential effect on the firm value.
Brigham, E.F., Gapenski, L.C., Daves, P.R. (2004) Intermediate financial management. Mason, OH: Thomson South-Western
Errunza, R.V., Padmanabhan, P. (1998) On benefits of portfolio investments in emerging markets. Financial Analysts Journal, maj-jun
Fabozzi, F. (2003) Capital market: Institutions and instruments. New York: Prentice Hall
Luenberger, D.G. (2003) Teoriaof financial investment. New Jersey: Prentive Hall
Maness, T.S., Zietlow, J.T. (1998) Short-term financial management. Fort Worth: Dryden Press
Petrović, P.B. (2000) Menadžment rizicima na tržištu kapitala - upravljanje rizicima u uslovima globalizacije finansijskih tržišta. Beograd: Institut ekonomskih nauka
Reilly, F.K., Brown, K.C. (2001) Analysis of financial capital. Englewood Cliffs: Prentice Hall
Scherr, F.C. (1989) Modern working capital management: Text and cases. Englewood Cliffs: Prentice Hall


article language: Serbian
document type: unclassified
published in SCIndeks: 22/02/2011

Related records

No related records