International Journal of Entrepreneurial Knowledge

Open Access Open Access  Restricted Access Subscription Access

Review of Financial Management in Private Firms: Unlocking the Cash Management Model


Affiliations
1 Tomas Bata University, Zlin, Czech Republic ., India
 

Financial management is a complex body of knowledge that is still evolving without any successful template for its practice, especially in private firms. This paper reviews research on actual financial management in private firms to see if cash management models critical to working capital management are incorporated. The approach is to review all the models in extant literature used for cash management, itself a component of working capital. However, search results show that only Pugmire (1952) outlines the activities involved in actual financial management practice for local schools in the United States. He identified the generalizable constituents of the financial management process, including budgeting, accounting, auditing, records and reports, and cost analysis. The choice of cash as the review focus is because it is the essence of financial management in private firms: determining and sourcing capital as cash and utilizing it by allocation process to generate more cash and maximize the firm's value to stakeholders. Therefore, this paper contributes to financial management literature by extending Pugmire's (1952) template for public schools with cash management models in extant literature that can also be adapted for private firms, with potential for further research.

Keywords

financial management, private firms, cash management, model
User
Notifications
Font Size


  • Abanis, T., Sunday, A., Burani, A., & Eliabu, B. (2013). Financial Management Practices In Small And Medium Enterprises in Selected Districts In Western Uganda. Federal university dutsin-ma institutional repository. Retrieved December 6, 2022, from http://dspace.fudutsinma.edu.ng/jspui/handle/123456789/2245

  • Adair, P., Adaskou, M., & McMillan, D. (2014). Trade-off-theory vs. pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs. Retrieved December 6, 2022, from https://www.tandfonline.com/doi/full/10.1080/23322039.2015.1006477

  • Agyei-Mensah, B. (2011). Financial management practices of small firms in Ghana: An empirical study. Retrieved December 6, 2022, from https://academicjournals.org/journal/AJBM/article-full-textpdf/122200F39825 DOI: 10.5897/AJBM09.285

  • Akgun, A. _ I., & Karatas, A. (2021). Investigating the relationship between working capital management and business performance: evidence from the 2008 financial crisis of EU-28. Retrieved December 6, 2022, from https://www.emerald.com/insight/1743-9132.htm Ang, J. (1991). Small Business Uniqueness and the Theory of Financial Management. Journal of Small Business Finance, 1(1), 1-13.

  • Banomyong, R. (2005). Measuring the Cash Conversion Cycle in an International Supply Chain. Annual Logistics Research Network (LRN) Conference Proceedings 2005. http://www.bus.tu.ac.th/usr/Ruth/file/C2C%20LRN%202005.pdf

  • Bloomenthal, A. Financial Ratio Analysis: Definition, Types, Examples, and How to Use. Investopedia.

  • Retrieved December 6, 2022, from https://www.investopedia.com/terms/r/ratioanalysis.asp

  • Brijlal, P., Enow, S., & Isaacs, E. (2014). The use of financial management practices by small, medium and micro enterprises: a perspective from South Africa. INDUSTRY & HIGHER EDUCATION, 28(5), pp 341–350. doi: 10.5367/ihe.2014.0223 Coe, C. (2011). Nonprofit financial management: A practical guide. https://books.google.cz/books?

  • Collis, J., & Jarvis, R. (2002). Financial information and the management of small private companies. Journal of Small Business and Enterprise Development, 9(2), 100-1102002. https://doi.org/10.1108/14626000210

  • Deakins, D., Morrison, A., & Galloway, L. (2002). Evolution, financial Management and learning in the small firm. Journal of Small Business and Enterprise Development, 9(1), 7-16. https://doi.org/10.1108/1462600210419446

  • Durach, C., Kembro, J., & Wieland, A. (2017). A new paradigm for systematic literature reviews in supply chain management. Journal of Supply Chain Management, 53(4), 67-85. Sethy, K. Definition of Management. EconomicsDiscussion.net. Retrieved December 6, 2022, from https://www.economicsdiscussion.net/management/definition-of-management/31854

  • Frank, M., & Goyal, V. (2009). Capital Structure Decisions: Which Factors Are Reliably Important?. Financial Management, 1-37. https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1755-053X.2009.01026.x

  • Godwin, D. (1990). Family Financial Management. Family Relations, 39(2), 221-228.

  • https://www.jstor.org/stable/pdf/585728.pdf

  • Jensen, M., & Meckling, W. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4). https://doi.org/http://hupress.harvard.edu/catalog/JENTHF.html

  • Karadağ, H. (2018). Cash, receivables and inventory management practices in small enterprises: their associations with financial performance and competitiveness. Small Enterprise Research, 25(1), 6989. https://doi.org/10.1080/13215906.2018.1428912

  • Kennedy, J., Tennent, B., & Gibson, B. (2014). Financial Management Practices in Small Businesses: Regional and Metropolitan. Small Enterprise Research, 14(1), 55-63. https://doi.org/10.5172/ser.14.1.55

  • Keynes, J. (1937). The General Theory of Employment. The Quarterly Journal of Economics, 51(2), 209-223. https://www.jstor.org/stable/1882087.

  • McMahon, R., & Scott, H. (1991). Small Business Financial Management Practices in North America: A

  • Literature Review. Journal of Small Business Management, 29(2).

  • https://www.proquest.com/docview/221005170?pq-origsite=gscholar&fromopenview=true

  • Kern, A., & Formoso, C. (2006). A model for integrating cost management and production planning

  • and control in construction. Journal of Financial Management of Property and Construction, 11(2), 75-90.

  • https://doi/10.1108/13664380680001081/full/pdf

  • Greenwood, R. (1981). Management by Objectives: As Developed by Peter Drucker, Assisted by

  • Harold Smiddy. The Academy of Management Review, 6(2), 225-230. https://www.jstor.org/stable/pdf/257878.pdf

  • Golden, B., Liberatore, M., & Lieberman, C. (1979). Models and solution techniques for cash flow

  • management. Computers & Operations Research, 6(1), 13-20.

  • Gregory, G. (1976). Cash Flow Models: A Review. Omega, 4(6), 643-656.

  • https://doi.org/10.1016/0305-0483(76)90092-X

  • London School of Business and Finance (2018). What is the importance of Financial Management?. London School of Business and Finance. Retrieved December 6, 2022, from https://www.lsbf.org.uk/blog/news/importance-of-financial-management/117410

  • Pavelkova, D. (2021). Financial management [ Doctoral seminar presentations on managerial finance, Tomas Bata University]. 2021 session, Zlin, Czech Republic.

  • Pugmire, R. (1952). Financial Management'. Review of Educational Research, 22(4), 311-316.

  • https://www.jstor.org/stable/1168673

  • Schickinger, A., Bertschi-Michel, A., Leitterstorf, M., & Kammerlander, N. (2022). Same same, but

  • different: capital structures in single family offices compared with private equity firms, 58, 1407–

  • https://doi.org/10.1007/s11187-021-00448-x

  • Tanyi, P., Smith, D., & Cheng, X. (2021). Does firm payout policy affect shareholders' dissatisfaction

  • with directors? Review of Quantitative Finance and Accounting, 57, 279–320.

  • https://doi.org/10.1007/s11156-020-00945-2

  • Taraba, P, & Hoke, E. (2021). Internal Grant Agency , Tomas Bata University: [ Project and financial management presentation, Junior Grants] 2021 session, Zlin, Czech Republic.

  • Wray, R. (2006). Keynes's Approach to Money: An Assessment After Seventy Years. Atlantic Economic

  • Journal, 34, 183-193. https://doi.org/10.1007/s11293-006-9005-2


Abstract Views: 133

PDF Views: 85




  • Review of Financial Management in Private Firms: Unlocking the Cash Management Model

Abstract Views: 133  |  PDF Views: 85

Authors

Salem Udoh
Tomas Bata University, Zlin, Czech Republic ., India

Abstract


Financial management is a complex body of knowledge that is still evolving without any successful template for its practice, especially in private firms. This paper reviews research on actual financial management in private firms to see if cash management models critical to working capital management are incorporated. The approach is to review all the models in extant literature used for cash management, itself a component of working capital. However, search results show that only Pugmire (1952) outlines the activities involved in actual financial management practice for local schools in the United States. He identified the generalizable constituents of the financial management process, including budgeting, accounting, auditing, records and reports, and cost analysis. The choice of cash as the review focus is because it is the essence of financial management in private firms: determining and sourcing capital as cash and utilizing it by allocation process to generate more cash and maximize the firm's value to stakeholders. Therefore, this paper contributes to financial management literature by extending Pugmire's (1952) template for public schools with cash management models in extant literature that can also be adapted for private firms, with potential for further research.

Keywords


financial management, private firms, cash management, model

References





DOI: https://doi.org/10.15759/ijek%2F2022%2Fv10i2%2F222397