Working Capital Management Relevant In The 21st Century Finance Essay

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In these contemporary days, all businesses trying to keep their working capital management at high level and also trying to get with 21th century .Up to date, the main aim for all business are to survive, to exist and to struggle each other; so this requires keeping a proper working capital management against unexpected events resulting from the future. Two companies, Arçelik a.ÅŸ. which was established at 1955 by Rahmi Koç , has 22,000 workers and 14 facility around world and 8,4 billion Tl revenue within ; Vestel a.ÅŸ. which was established at 1953 by Mehmet Zorlu that wants to become worldwide company continued export oriented growth strategy and has 15 000 workers , were chosen for this case study. Quality racing and competition of last 10 years helped home appliance industry has in large degree in Turkey. Immediately after, beginning of consumer awareness led businesses into competition.Thus, among the companies which are operating in the same sector, Arçelika.ÅŸ. And Vestel A.S. should have the right working capital management mechanism to survive. Moreover, by checking of Arçelik and Vestel working capital management, it can be said that which kind of problems they will face and will affect on the market. For example, DSO , DPO , DIO and CCC have to be low and also CCC must close to shortest(smallest) level which is company reach , minimum level of CCC represent effective operation and cash management for companies ,so after analysis which will be made , the right comments can be made about Arçelik and Vestel. In the end, depending on the results and problems, the right recommends can be mentioned. 2. Introduction It can be said that 3 phases in business life; First one is introduction part for investors' ideas and plans, Second phase is that the investment which is decided to be made by investors and turning out of the company. In the last phase, going into operation of a company, meaning that, providing of all equipments, labor force, starting to produce and to sell of all products. Importance of working capital management arises. Working capital management is the most important component of business activities, and focuses on short term investments and investment decision of companies' success of company depends on having enough of net working capital and being of good quality. This is Due to the success of a company related with power of paying its debts. , capable of finding new credits and also having a good net working capital. At the first instance this easily explains why working capital management is so important for progress. Whether an international company or a domestic company, all principles of working capital are the same for all institutions. Thus, companies decide that how much amount of investment will be made and how to finance them by taking into consideration of risks and stability. Companies try to raise their values with decisions in working capital management. However; international businesses encounter with difficulties as international financing and investment opportunity as well as fluctuations in value of money, the potential foreign exchange controls, a large number of tax applications. As it's seen, working capital management is not only the component of working capital; it also includes decisions about how working capital will be funded for future beings. Nonetheless, Current assets and current liabilities play an important value for balance sheet of businesses; also ensure continuity of businesses, which are components that deeply related with working capital management. Lastly , Working capital company work at full capacity, production must continue, uninterrupted , for positive business volume, broaden, and thus reducing the risk to meet its obligations to increase the credit worthiness, financial distress in times of crisis, and not live to carry out the profitable activity and efficient manner is of great importance. 3. Is Working Capital Management relevant in the 21st century? It is strongly seen that working capital is most important case in the 21st century. Working capital finances the cash flow cycle. When working capital is negative, and then means company has no funds from its day to day operations. Working capital answers that how much funding a business needs to operate? Short term funding is very necessary for companies; because to make the way in long term, it is needed cash in short term to survive against go bankrupt. Later on, net working capital will be positive means that current asses excesses current liabilities. From companies' looking, excess of working capital operating inefficient. Because it shows that customers still owe to the company, there is no money return and cannot be used for company obligations. This can be observed by comparing working capital structure of the company's time to time. If there is slow collection, this can give signal of incoming problems. The main goal of working capital management is to obtain the balance of each working capital components. Therefore; the main is, convert funds held in banks to cash thereby maximizing the interest earned. In recent years, dynamic discounting method is used on customers to maximize working capital. This will provide early payment to companies, more cash inflow to be used for obtaining proper operating in working capital management. At the present day, necessity of working capital may vary according to departments. Each component must be placed on the right department to be used. Because, whilst some departments need significant levels of inventory; the others need little. The necessity of working capital management must be taken into account in relation to other aspects of departments. 4. Definition of working capital management Working capital is all assets convertible to money and all expenses are done, in order to be used for starting into operation of a company as well as to carry these all activities on. Current assets are gross working capital. So, what is net working capital? It is the result of: Current assets -short term liabilities = Net working capital Therefore, all current assets defined as: 1-liquid assets 2-securities 3-receivables 4-stocks 5-prepaid expenses for future months 6-income accruals All components of current assets are really important case for business to provide a good lead in working capital management to avoid from current risks in this current century. In accordance with all of these information's, a successful working capital management has to bear these points below: 1-divisible capability 2-Short-term and liquid 3-all components are moving and interrelated each other 4-working capital decisions can be revised as soon as possible 5-Investments have limited effect on the degree of business risk CASE STUDY -ARÇELÄ°K 5.1Company Profile Vision Statement: -Providing of profitable, long-termed and sustainable growth -To maintain with positive growth, increasing of target market share threshold -Innovative, reaching more consumers with the products and implements -To see the future with institutional consciousness -Being a global group; providing of integration of all components and optimization Mission Statement: ''Adding value of human life by providing innovative, protector of nature, authentic, technologically developed product's to create value for the customers''. Objectives: ''They change their objectives due to the changing on new vision and Core operation goals pegged in line with its new vision describe three aspects of sustainability in economical, environmentally and socio-cultural. Targeting participate in solution within the profile of perpetuity approach, Arçelik. sustains its efforts targeted towards change in climate and safe keeping of scarce natural resources''. 5.2 Company s business segments and Market share Arçelik growth %8 in 2010 in 6 products, Arçelik A.Åž. is the leader of the consumer durables sector in Turkey and Romania, the second place in UK market. The first five place in all Europe .World's top ten consumer durables brands in nine main product segments, leader in consumer durables market and in fridge, freezer and oven product groups in UK. Second brand in the fridge market in Belgium, In Poland, the second exporter in washing machine market and third exporter in freezer markets, In Lithuania, first brand in all white goods market and in washing machine and fridge product groups. Business segment produce in durable consumer goods industry, marketing and after-sales services. .White Goods .Consumer Electronics .Other Market size 6.5 million unit Market value 4.5 billion Tl %20 of Eastern Europe and Russia 5.3 Business performance EBIT and ROCE EBIT: Firstly, let's look at the EBIT, which is illustrated by graph below. We can see that amount of EBIT tl mn was changing year by year. The exact amount of each year is follows: EBIT 2009: 686 EBIT 2010: 638 EBIT 2011: 646 EBIT 2012E: 846 The graph is showing us general vision of the company, which provides assumption how much cash get into the company from their core business before the interest and taxes. Moreover, it presents operating profit after the global crisis in 2009 when the company increases their operating profit. However, after 2009 the operating profit tends to reduce due to the euro crisis in EU zone. When we look forward at the Arçelik global operating network, we can notice that 10 countries from EU zone fit in decreasing profits (Romania, France, Slovakia, Germany, Czech Republic, Spain, Italy, Slovakia and Poland). In result disposable income reduced in EU zone and the costs of raw material and unfinished goods accrued. In spite of that from 2010 to 2012 the operating profit tends to increase due to crisis effect decrease. ROCE: Indicates the efficiency and profitability, which are coming from company's capital investments. ROCE should always be higher than company's borrowings, because high borrowing rates cause less shareholders earnings - a good ROCE is greater than borrowing rates. The formula is: EBIT / (Total Assets-Current Liabilities) ROCE2009: 686/3246:0.2113=%21.13 ROCE 2010:638/4979: 0.1281=%12.81 ROCE2011:646/5667: 0.1139=%11.22 Change, which has place from 2009 to 2010, has got two causes. First one is total asset, the company increased their total assets for investing, total assets getting narrowed within net capital working, which reflected liquidity problem. Furthermore, from 2009 to 2010 they reduced their current liabilities and this was the reasons, which affected ROCE in 2011 increasing total assets continued. Firm faced to liquidity problem, but in the other hand, when we are looking at credit note from Fitch Ratings is AA. That's why quality of companies is in bit higher risk than AAA and this position makes AAA the best credit note, which is stable and at minimum risk. 6.1 Company's Profile ( Vestel ) -Vestel focusing on the core business activities of the production of high-quality consumer products constantly under the control of both revenue and profitability development aims to achieve. -Europe will be remaining as the main target of Vestel, to respond new trends and add new products; its portfolio aims to be close the market. -In order to maintain its position in the market, Vestel, aims to invest more in research and development. -Internal market of the company will continue to play a pivotal role in all business activities. -The main target areas are electronic products and white goods; Vestel also expects to improve its efficiency both domestic area and abroad. 6.2. Business Segments and Market Share Vestel continued to be the leading choice of customers a total of 15 million units in 2008 with the production of the main export market in Europe. Vestel serves its customers as produce TVs, white goods and digital goods. Vestel that exporting to 131 countries worldwide offers leading-edge product to consumers. Accounting of %76 of sales, which is 2.8 billion dollars composing of %86 total exports were to Europe. The target countries are Germany, Switzerland, Australia, Denmark, Spain, Italy and Portugal .Vestel carried out export LCD TV as by %82 in 2010.Vestel has hold the title of '' Turkey export champion '' in the electronics industry for over 13 years; also Vestel won the second prize among 500 most exporting companies. Vestel is not satisfying with being export champion of its sector also it wants to be a champion in Turkey's market thanks to module production. 6.3 Business performance EBIT and ROCE We should take into account the white good market for Vestel company by the reason of different sector. Due to this we are taking VESBE (Vestel White Good company ) as an exaple. The ebit data from 2009 to 2011: 2009-169 2010-31.4 2011-59.9 indicates that after 2009 the operating profit is significantly decreasing in Vesbe and Arçelik EBIT, but in here the decrease is so sharply, which is the first cause of EU zone crisis due to the increasing costs. Taking further look at the balance sheet and income, in 2010 statement income from sale accures as compared to 2009, but the cost of sales are increasing as well. Another important point is that gross profit, and gross profit from business operation, decreased for about %50. Moreover, administrative and marketing expenses increased as well as R&D. After all to see the core causes there is need for investigate the other ratios, but even if we compare Vestel with Arçelik, there is one conclusion that Arçelik managed the crisis better than Vestel Even so, in 2009 governmet encourged excise tax and companies, therefore, increased their incomes. this is very important information to understand the difference between 2009-2010. ROCE : For Vestel company ROCE now is very significant for investors due to EBIT. The formula is : EBIT /(Total Assets-Current Liabilities ) ROCE2009 : 169/647 :0.2612=%26.12 ROCE2010:31.4/596: 0.0526=%5.26 ROCE2011:59.9/567 : 0.1056=%10.56 As we can see in graph in 2009, due to the government policy, Vestel used opportunity well, but after 2009 the data's decreasing sharply and it is pointing out that this company is not stable. By the reason of this, it is not possible to managed the risk and unexpected developments from credit rating the notes from Moody's they gave to Vestel B2 (rating) it means ''Judged as being risky and a great credit risk'' It appears to be, it's unstable and the company is not so confident in dealing with investors also the risk level maximum in this company for investors. In other words Vesbe for investors is like a dice game. 7. Working capital analysis 7.1Total revenues Price time's quantity gives total revenue. For short-term analysis, production decision, it's very important component for company's due to balance quantity and price to get maximum profit. We will compare Vestel and Arçelik company with graphs (The graph shows the difference between Arçelik and Vestel. For the first look we can notice that Arçelik and Vestel are increasing their total revenues, which is a positive signal for country's economy, like also important factor for development in export, by the reason of exported goods. 2010-2011% changed total revenues for Vestel, which in consequence gave %38. It is significant increase for this company, but on the other hand for Arçelik from 2010-2011 % change in total revenue amount %21. As the result, this two data showed us that white good sector is getting wider in internal and external market. However, important thing is that, it should be sustainable for these two companies. Below there is the other information about revenues, inventories increasing from 2009 to 2011: For Arçelik: (ml tl) 2009: 906 2010: 987 2011: 1530 For Vestel: (ml tl) 2009: 131 2010: 162 2011: 229 For Vestel from 2010 - 2011 increasing from inventories was at %41 and for Arçelik in 2010-2011 %55. Therefore, now we can understand why the operating income is decreasing from 2009 until 2011. On the one hand, these two companies should increase their Total revenue sustainable, on the other hand they have to take into consideration inventories and cost of production, it's reducing the aim of profit maximization and the last thing is Total revenues and operating income should be parallel for company s goodness. 7.2 DSO It indicates that a number of the days to get revenue by a company which has been paid after transaction .If DSO is low the company will be paid in fewer days so the account is receivable. Otherwise, high DSO shows that the company receives money in longer days, like credit to its customers. The formula of DSO Accounts receivable/Total Credit Sales x Number of Days In this graph as we can see again Vestel DSO is amazingly high in 2009. Then if we look at the Account receivable from 2009 to 2011 (2009: 347, 2010: 444, 2011: 606) Account receivable is increasing,. When we turn back the formula we can understand the reason of credit sales decreasing due to the lack of collecting receivable activity. If we look at the different perspective to this case, Vestel wanted to catch Arçelik in Domestic and Foreign market. In addition to this they made amazing promotions like 36 48 month installment for white goods, which reflected on 2010 EBIT's reduction from 168 to 31. Moreover, due to the collecting activity 210.37 days when the company couldn't take the money from customer, the production of new products was impossible and R&D department couldn't make new investment. Finally, the most important thing is the company needs liquidity for the continuation of it. However, after 2009 they changed the policy on credit sales and the DSO was going back to the balanced way like Arçelik. Also as we can see the graph, Arçelik is trying to defend their policy just in 2009 we can notice that government excise tax incentive. The DSO was increased due to this promotions cost too. Therefore, good advice is: If your competitor is making promotion you should make too. Nevertheless, this changing is not as significant as Vestel after 2009 by the reason they turned back the normal policy and the DSO was going to be stable, which is also very important for companies (it should be not high and stable). What is more to mention, industrial average's is very important on this topic and for White Good business generally producer is selling their product with long periods. Also we can look from the other perspective and see that the company doesn't fix on their income to DSO as the consequence the company has got strong economy. In this example Arçelik is taking positive advantage. 7.3 DIO A financial measure indicates that how long time the company's inventory turn its inventory into sales quickly. This gives investors an idea of this process will be higher or lower. The lower DIO is the better, means that inventory quickly turn into sales and become cash; but DIO varies from one industry to another. So, decreasing days show an improvement in working capital. Here is how the DSI is calculated: Inventory/Cost of Sales x 365 DIO has got key role for working capital management. The issues are being debated on last 5 years in whole world and DIO is able to make change in industrial perspective. For instance, for automotive sector the number can be 7.6 times or 8 times in one year. In the DIO Arçelik company is trying to do not change their policy and again it is showing us significant role of the Arçelik Company in this sector. Further, as we can see in this graph Arçelik is trying to develop their working capital year by year (we will see the graph of Net working Capital) DIO mean how quickly company can turn inventories into cash and it mean Liquidity after 2009 and as the result both company decrease their DIO levels, which is good sign for both company. What is more in 2009 Vestel under the average industrial level of DIO by 155.24 days and created Liquidity problem for company. The sharply decrease from 2009-2010 explained again to us why it happened (Also we will see in DPO) In white good sector it's important to keep the high level of DIO, but in assumption that 40 days level can be arguable for Vestel again. 7.4 DPO It indicates the average number of days a company pays to its suppliers. The formula is: (Account payables/cost of Sales)*365 Days payable outstanding is the activity how a good a company managing its account payable. The lower ratio, the quickest time the company has to pay the liabilities, the higher ratio means better credit ratio term the company gets from the suppliers. So increasing in DPO is improvement, decreasing in DPO is distortion. In 2009, as we can see in the graph, Vestel is paying their supplier more than 1 year 371.84 days and after 1 year they decreased to 64.61 days and the DPO making it longer. The DPO is positive affect to our company, but on the one hand when we will make this time longer our suppliers will affect from this negatively and for next year it will affect our net profit, operation profit etc. In addition, one more time we can understand the sharply decreased in 2009-2010 of Vestel company in this example. On the other hand, for Arçelik DPO is very small for 2009 34.9 days and this is good for our retailers, but for our company C2C cycle it will affect negatively. According to this information Arçelik increased and we can assume that made it longer DPO period 34.96 day to 64.90 days. 7.5 Cash Conversion Cycle The length of time, in terms of days, that takes for a company to convert its resources into cash flows. This amount of time the inventory is needed to be sold, to collected receivables and the time the company is capable of paying its bills. Company obtains inventory on credit, results that accounts payables. And also company can sell products on credit, results that in account receivables. So, cash conversion cycle measures the time between cash outflow and cash inflow. The cycle is important for especially retailer, accordance with in short term importance. The shorter cycle, the less time capital is attached to business process, and so the better for the company profit line. The formula is : CCC:DIO+DSO-DPO In Cash conversion cycle we will understand better other indicators too. Now we should look at 2009 for both companies. Vestel has negative CCC, which means that they are not paying their supplier and concentrate at the DPO Vestel DPO we will see that is 371.84. By the reason of that it represents that they are not paying and it is affecting CCC. What is more there is explanation of sharply decreasing in 2009-2010 and increase of CCC after 2009. The result of this is change in the policy of DPO (they are bringing it to balance). Arçelik decrease their CCC, which made a positive effect for company and after 2009 they brought it up to the steady line. Moreover, for Arçelik we can't suggest the same fluctuation is going on 2009 to 2010, because of increasing from 2010 to 2011 decreasing. Therefore, period from 2010 to 2011 provided to as suggestion that Vestel is trying to fix their company structure. In contrast to that from 2009 to 2010 for investors Vestel is like risky game, but in general perspective Arçelik is trying to do their vision statement of Sustainable growth and they are not dice. On the other hand, Vestel is taking a big risk for their company. Further, we can look at the other companies for White good market in graph below. The Electrolux CCC from 2009 to 2010 is decreasing and after one year increased a bit, but we can assume that the graph looks like Arçelik graph, so also Electrolux looks like Arçelik, of course there is a difference from amount, but Arçelik has got 2 problems in CCC. First one is about low DPO and the second one is about high DSO. When Arçelik reduces DSO 40-60 days level, and also when the DPO level move to 60 days, the CCC will come to 50-60 days level. In the consequence the company will be more efficient than before. Furthermore some people do not support this analysis by the reason of misleading information for Investors. To understand whole financial structure of companies we should analyses all indicators. Net Working Capital for Arçelik A.ÅŸ

Mn TL

2009

2010

2011

Account Receivable

2,233 2,325 3,181

Inventory

907 988 1530

Account Payable

(762) (969) (1250)

Net Working Capital

2378 2344 3461 Net Working Capital for Vestel A.ÅŸ

Mn TL

2009

2010

2011

Account Receivable

347 444 606

Inventory

131 162 230

Account Payable

(196) (271) (442)

Net Working Capital

282 335 394 After that this two firms in the last 3 years are increasing their Nwc. However, when we look at the 2008 the crisis term we will notice that VESBE has got -80(mn TL) and Arçelik has got 3241(mn Tl) Nwc. This repercusion is giving us a suspicious perspective for analysis again. Yet, the other ratios Vesbe doesn't stabilize their economical background and becoming insecure for Investors, but from 2009 to 2011 they improved their capital working and it is the reason why they will try to fix their economic structure. Ä°t appears to be that more analysis for this matter are needed, but the scale show Arçelik again, which probably will help to understand better why they are leaders in this sector .In this tables we can see the Market Capitalization and Industrial avarage for our 2 companies additionaly Financial ratios for Investors and general view on our companies. C:UsersuserDesktopsektör.png

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8. Debtor Management and Cash Flow ARÇELÄ°K 2009 2010 2011 Net Financial Debt/Equity %44 %22 %31 Current Ratio 1.31 2.03 1.99 Financial Leverage Ratio 0.57 0.53 0.54 VESTEL 2009 2010 2011 Net Financial Debt/Equity %238 %250 %248 Current Ratio 1.1 1.2 1.1 Liquidity Ratio 0.8 0.8 0.9 It's the strategy improved to help debtors' to manage their debts. This strategy is usually enforced by an outside company or organization for debtors. Because debtors are not capable of manage the debts by their own, due to lack of knowledge and to be full of business. To minimize the loss due to taking money from debtors is the main goal of debtor management. 8.1. Analysis for Arçelik A.Åž. Arçelik, especially in the second and the third quarters led to a significant improvement in the performance and profit margin. The amount of net financial debt decreased by more than 60% thanks to generation of a positive cash flow during year. Merger between Arçelik and Grundig was completed in the middle of 2009, contributed the process management and profitability. Arçelik, which is one of the most profitable companies have continued to increase between competitors in 2009.Arçelik reduced its freedom from debts to 740 billion dollars due to successful working capital management in 2009.At the end of the first quarter 2011, net freedom from debts of the company in the current period reached 1 billion TL in order to having capital requirements. Last month, Finch increased the credit ratings of Arçelik A.Åž. from stable to positive. Thus, the company may borrow money at the lower interest rates. So the company's freedom from debts may decrease even more. (DPO 2009: 34.96, 2010: 64.90, 2011: 68.66). DPO rating is increasing per year; this can be said that Arçelik A.Åž. catches the ideal rate of DPO. 8.2. Analysis for Vestel First of all, paying outstanding for Vestel A.Åž. is 367 days so at this situation it is more than 1 year. This naturally decreases Vestel's credit notes ; but after due to good policy making the credit note increased to B2 ( days of payable debts decreased from 367 to 321 ).Other hand , when it is compared with Arçelik,Vestel has bad credit rating, judged as being risky and great credit risk, so in the short-term debts are being more credit risk. Buy backing of its 225 m outstanding bonds , Vestel got a significant chance to refinance the risks and had a better position in 2011.Fitch also has affirmed the senior unsecured rating of Vestel Electronics Finance A.ÅŸ guaranteed issue of USD225m 8.75% 2012 maturity notes at 'B'/'RR4.Debt burden is increasing because of demand contraction in Europe. However premium at Euro eases the burden in 2011.Also, inventory turnover was increased by Vestel especially after crisis in 2008 so this is also another reason to ease the debt burden. Cash management Cash management is an essential skill for small businesses because they typically have limited access for proper credit and have a significant amount of prepayment costs they need to manage while waiting for receivables. Good managing cash provides a company to meet unseen expenses in addition to handling regularly-occurring events like payroll. One of The key ratio for measuring cash management is working capital productivity it s measures how the company will use the cash effective and productive ıt can be formulate as Total revenue/Net working capital. When its compared Arçelik and Vestel WCP, the results above are obtained: 2009 2010 2011(Arçelik) 2009 2010 2011(Vestel)

%19 %20 %23 %11 %14 %11

As we can see in the results Arçelik company is managing their cash management more productive than Vestel and it s bring us a valuable result when companies are getting specialized on working capital management they made a win-win circle (customer-investor-company future) furthermore using working capital productive rescue the company from expenses, idle money, unnecessary investments and when they are improving working capital(it s come from how the company using cash)the result bring to company high level position in market like Arçelik. When Arçelik and Vestel are compared in terms of cash management, Arçelik is seen more advantageous than Vestel. Being of Arçelik is an older company than Vestel, provides to give more professional decisions; due to fluctuations in value of copper and Euro, Arçelik is affected less than Vestel. This is the evidence of how Arçelik uses working capital very well. The other point is that due to both companies are exporter, they have a direct effect on domestic market (balance of payment), using cash efficiently adds a plus the country economy. In the end, it is seen that Vestel is trying to increase its working capital, in case of this comes true they can go further. Research and development must be more cared of by Vestel. 9. Recommendations Weighing the pros and cons, I come to the conclusion that  in the whole project, working capital is the key element for companies economy and also important matter for whole economy in every country. Due to export when the country's export rate is bigger than Import rate, the trade balance is getting fixed and this is significantly important for whole economy. Although, in country it effects directly to the GDP, and by the reason of that GDP ratio is the key ratio for understanding economical situation for country, because when our GDP is in sustainable growth position we can understand that our economy is growing and our life of quality is increasing. In this case this two companies are making the positive effect for country economy with export facilities. In addition to this, two company has to know how to use their cash and they shouldn't waste money. For example, if we go back to the analysis, due to the WCP, Vestel has lack of information about how to use their cash more effective. On the one hand, Arçelik is using the money more efficient and it's bringing the leadership for Arçelik. On the other hand, Vestel should make rational choices, because when we are analyzing the ratios we are noticing that Vestel has got fluctuate situation due to their policies and Crisis. As I already indicated, they should focus on their policy and decisions first. Secondly the new market should be introduced to produce new goods (Undeveloped countries). Additionally, also we can mention that improve of efficiency level on operations is needed, because as we looked at the EBIT it was getting narrower day by day and it was also important reason to understand Vestel situation. 2008 crisis and EU zone crises effected the purchasing power that's why companies should make discounts and promotions (it's significant for using idle Inventory) for customers. The other problem worth to consider was that copper cost increased within 2008-2010, which also made the negative effect on the sector there. I should like to emphasise that for minimizing the risk level (coming from outside), companies are required to improve liquidity, because when it will happen companies will be needing a cash. If they cannot find enough assets, the companies will live the bankruptcy. Also, if the companies don't want to live this situation there are 4 steps for Vestel. First, increase the WCP, then enhances the investments, after increase the R&D facilities and finally the most import thing is to accrue the quality level of products (from customer comments) which makes the final decision for Vestel. So all in all I believe that from the Arçelik perspective they should keep the general level on company economy and for the sustainability should continue on Net Working Capital productivity. 10. Conclusion Crisis period that started in 2008 - 2009, affected Europe and in the end of it , working capital management become more important lastly. Cash demand, occurred in crisis time, while some companies went bankrupt, the others operated effective working capital management and survives from suffer in crisis bad effects. On behalf of two Turkish company Arçelik and Vestel has picked up for this case study, the attracting point is that turning out of vision statements. Arçelik stresses on sustainable growth insistently and we saw that it became real. As for Vestel, it wants to raise its profitability. The difference is, it shows that the robust strategies get companies to the solutions quickly, like Arçelik. The point we want to attract is, mission and vision has how much important role on company and give us general view because there lays fact of company strategy. DIO, DSO, DPO and CCC analysis's says that Arçelik is more trust giving compared to Vestel. According to this result, Vestel should catch Arçelik in terms of financial statement. This process will provide country to have two strong companies compete each other to be the leader in the sector .In fact, this is very important issue that competition creates values and get this value, companies will spend more money on their research and developments to call upon the customer satisfactions. In conclusion, the cash demand in crisis period and decreasing disposable income will continue to be as nightmare of businesses; but the companies which have strong working capital management and quick reacted to changes will stand after crisis. Thereafter, Vestel should use its cash management more efficiently to turn it as an opportunity in crisis time. As for Arçelik, by protecting its current state, it should increase its activities around the world.
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