Title: Advanced model for working capital management: bridging theory and practice

Authors: Sari Viskari; Anita Ruokola; Miia Pirttilä; Timo Kärri

Addresses: Department of Industrial Management, Lappeenranta University of Technology, P.O. Box 20, FIN-53851 Lappeenranta, Finland. ' Department of Industrial Management, Lappeenranta University of Technology, P.O. Box 20, FIN-53851 Lappeenranta, Finland. ' Department of Industrial Management, Lappeenranta University of Technology, P.O. Box 20, FIN-53851 Lappeenranta, Finland. ' Department of Industrial Management, Lappeenranta University of Technology, P.O. Box 20, FIN-53851 Lappeenranta, Finland

Abstract: The paper introduces an internal information tool, the advanced cash conversion cycle (ACCC), for controlling the amount and cost of working capital, by refining and extending the concept of the weighted cash conversion cycle. The ACCC model has been developed with a real world value chain case from the pulp and paper industry, and it addresses issues overlooked in the prior model. The ACCC offers visibility through the value chain, elimination of the problem of a negative margin, a more simple calculation of accounts payables compared to the prior model, and new metrics to control working capital in companies.

Keywords: working capital management; operating cycle; cycle time models; value chain; modelling; cash conversion cycle; weighted cash conversion; pulp and paper industry.

DOI: 10.1504/IJAMS.2012.044868

International Journal of Applied Management Science, 2012 Vol.4 No.1, pp.1 - 17

Published online: 06 Aug 2014 *

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