Work detail

Working capital management in retail

Author: Mgr. Michael Dibon
Year: 2020 - summer
Leaders: Mgr. Aleš Čornanič
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 68
Awards and prizes:
Link:
Abstract: This master thesis is focused on operating working capital and its implication towards corporate
performance in the retail industry in a relevant business framework that takes into account
structural changes in the industry. Our results suggest that there is a negative relationship
between cash conversion cycle and corporate performance. Therefore, the management of retail
companies should focus on shortening the cash conversion cycle to create value. However, in
the apparel retail industry, companies with exceptionally long cash conversion cycles are better
off keeping working capital investments high as those companies generate on the WC higher
profitability than are the opportunity costs for this allocated capital. Finally, we have not found
enough evidence to conclude that investment strategies based on the cash conversion cycle are
able to generate alpha. However, there seems to be a sign of persistence for value-weighted
portfolios.

Partners

Deloitte

Sponsors

CRIF
McKinsey
Patria Finance