Firm, industry and economic determinants of working capital at risk
What is it about?
The objective of this study is to examine the relative contribution of firm-level, industry level and country level variables to working capital at risk. Working capital at risk is treated as the value at risk for a portfolio of firm's current assets. As far as short-term liquidity is concerned, working capital at risk, being the maximum amount that a firm may lose at a certain confidence interval, must be the most important part that a firm's management must focus on.
Why is it important?
This study offers a new approach that deals with working capital as a portfolio, rather than single ratios, that firm's management must decrease its volatility (value at risk), therefore, short-term liquidity can be improved significantly. This approach can be considered a financial engineering in terms of monitoring and managing short-term liquidity exposure.
The following have contributed to this page: Professor Tarek Ibrahim Eldomiaty