Management of the financial cycle at different life-cycle stages in russian companies

Economic & mathematical methods and models

The value and efficiency of using the working capital are the main conditions for successful activity of a company. Among the issues related to improving the efficiency of the company's activity, the issues of rational use of the working capital take an important place. The purpose of working capital control occurs in all industries and at different stages of the life cycle. Financial cycle management has a special place among the elements of the working capital. The financial cycle combines all the elements of the working capital, therefore, by controlling the financial cycle, it is possible to develop a common policy of all components of the working capital. This article analyzes the impact of the financial cycle on the efficiency of Russian companies at the stages of growth and maturity. The research is based on the data of Russian retail and production companies during the period of 2010-2015. The method is based on a quantitative analysis of empirical data. We used regression analysis methods. The results show that to increase the efficiency of the companies,  the period of turnover of the working capital components should be reduced. Testing the non-linear dependence of the company's profitability on the financial cycle allowed us to determine the optimal length of the financial cycle in different industries and stages of the life cycle. The results showed that the quadratic dependence is confirmed for production companies at all stages of the life cycle and for retail companies only at the stage of maturity. At the stage of growth these companies need to minimize their financial cycle. The optimal level of the length of the financial cycle for the industrial sector companies at the stage of maturity is about three times greater than for the companies in the growth stage. The changes in the working capital have stronger effects on growing companies than on mature companies. This effect should be considered when making financial decisions and in developing strategies for working capital management.