The management of cash and trade credit: impact on working capital

Abstract

The study of financial management of cash and trade credit is an important function of the financier in the socialist state enterprise. Unfortunately, on many occasions, the financier is outside of making key decisions for the operation of the company. Based on the previous reflection, the present work was carried out, which covers the years 2021-2022. Its objective is to apply a financial procedure through the use of financial analysis methods and techniques to measure the impact of cash administration and commercial credit on working capital. To achieve this objective, the information reflected in the Financial Statements, the documentation that reflects the age of the accounts receivable and payable, the files by clients and purchase and sale contracts of a state company were used. The results achieved when applying the procedure, based on financial analysis techniques, indicate that the company operates with positive working capital, inability to meet short-term obligations with its most liquid cash item and deficiencies in credit management commercial; with aged balances accounts receivable and payable, which indicate deficiencies in collection and payment policies. These results reflect a detrimental impact on the management of these items in the administration of working capital of the company. The procedure makes it possible to provide managers with precise information to strengthen decision-making.