Bachelor Thesis, 2015
122 Pages, Grade: 1,3
List of Figures
List of Tables
List of Abbreviations
2 Literature Review
2.1 Object of Working Capital Management
2.1.1 Working Capital
2.1.3 Working Capital Management
2.2 Company Crises
2.2.1 Crisis Process
2.2.2 Crises Causes
2.2.3 Early Detection and Intervention
2.3 Working Capital Management during Crisis
2.3.1 Working Capital Management as a Cause, Indicator and Counteragent
2.3.2 Working Capital Management during the Global Financial Crisis
2.3.3 Working Capital Management after the Global Financial Crisis
4 Results of Empirical Research
4.1 Overall Results
4.2 Special Observations regarding the Object of Cognition
4.2.1 Industry Sectors and the Relationship to Working Capital Management
4.2.2 Company’s Size and the Relationship to Working Capital Management
4.2.3 Company’s Age and the Relationship to Working Capital Management
6 Conclusion and Forecast
Figure 1: Balance Sheet with Relevant Items for the WC
Figure 2: Roles of Managers
Figure 3: Classical Management Process
Figure 4: Target Hierarchy of Working Capital Management
Figure 5: Typical Process of a Crisis
Figure 6: Influence of Insufficient Working Capital Management during Crisis
Figure 7: By Literature Expected Changes of the WCM Quality
Figure 8: Production Indices in the EU and the USA 2002 – 2010 in Percentage
Figure 9: Actions of the ECB and the EU against the Global Financial Crisis
Figure 10: Changes of Interest Rates for New Loans to Companies
Figure 11: Expected Changes of the WC-Ratio - Literature vs. Hypothesis
Figure 12: Expected vs. Measured Overall WCM Quality between 2004 and 2014
Figure 13: Expected vs. Measured WCM Quality in the Automotive Sector between 2004 and 2014
Figure 14: Expected vs. Measured WCM Quality in the Industry Sector between 2004 and 2014
Figure 15: Expected vs. Measured WCM Quality in the Chemicals Sector between 2004 and 2014
Figure 16: Expected vs. Measured WCM Quality in the Consumer Goods Sector between 2004 and 2014
Figure 17: Expected vs. Measured WCM Quality in the DAX between 2004 and 2014
Expected vs. Measured WCM Quality in the MDAX between 2004 and
Figure 19: Expected vs. Measured WCM Quality in the SDAX between 2004 and 2014
Figure 20: Measured WCM Quality in Established and New Companies between 2004 and 2014
Figure 21: Expected vs. Measured WCM Quality in All Industry Sectors between 2004 and 2014
Figure 22: Expected vs. Measured WCM Quality in All Indices between 2004 and 2014
Figure 23: Comparison of Measured WC-Ratios of All Indices (Mean) between and 2014
Figure 24: Expected vs. Measured Overall WCM Quality between 2004 and 2014
Table 1: SPSS: Descriptive Analysis of the Adjusted Overall Results
Table 2: Transposition of the Mean of WC-Ratios to WCM Quality (Overall Results)
Table 3: SPSS: Calculation of the Pearson Correlation between the Expected and Measured Overall WCM Quality
Table 4: SPSS: Descriptive Analysis of the Automotive Sector Results
Table 5: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the Automotive Sector
Table 6: SPSS: Descriptive Analysis of the Industry Sector Results
Table 7: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the Industry Sector
Table 8: SPSS: Descriptive Analysis of the Chemicals Sector Results
Table 9: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the Chemicals Sector
Table 10: SPSS: Descriptive Analysis of the Consumer Goods Sector Results
Table 11: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the Consumer Goods Sector
Table 12: SPSS: Descriptive Analysis of the DAX Results
Table 13: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the DAX
Table 14: SPSS: Descriptive Analysis of the MDAX Results
Table 15: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the MDAX
Table 16: SPSS: Descriptive Analysis of the SDAX Results
Table 17: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the SDAX
Table 18: SPSS: Descriptive Analysis of the New Companies Results
Table 19: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in New Companies
Table 20: SPSS: Descriptive Analysis of the Established Companies Results
Table 21: SPSS: Calculation of the Pearson Correlation between the Expected and Measured WCM Quality in the Established Companies
Table 22: SPSS: Calculation of the Pearson Correlation between the Measured WCM Quality of Established Companies and New Companies
Table 23: SPSS: Calculation of the Pearson Correlation between the by the Literature Claimed and the Measured Changes in WCM Quality (Overall)
Table 24: SPSS: Calculation of the Pearson Correlation between the WC-Ratio (Mean) and the German GDP per Capita between 2004 and 2014
Abbildung in dieser Leseprobe nicht enthalten
Formula 1: Net Working Capital
Formula 2: Detailed Calculation of Working Capital
Formula 3: Working Capital – Ratio
Formula 4: Calculation of Working Capital-Ratio as Management Quality QM
The present thesis tries to figure out, if the Working Capital Management of German companies is reactive to changing interest rates for their refunding or if it is really a pro-active improvement since the beginning of the 2000s as claimed by the literature. After a theoretical definition of Working Capital, its functions, goals and its relationship to the management process, Working Capital will be set into a context of company crises to lead to the central object of investigation, the Global Financial Crisis. With a quantitative analysis via DataStream of the companies currently listed in the DAX, MDAX and SDAX (N=130) it will be examined, if the credit crunch for companies in the Global Financial Crisis and the easy refunding possibilities afterwards due to the easy money policy of the European Central Bank had effects on the quality of the Working Capital Management. The analysis of the data via SPSS will show, that the possibilities of refunding indeed influence this quality, whereby the intensity of the reactionary behaviour of the companies depends mainly on the object of cognition, which is in this thesis examined by the parameters size, age and industry sectors, so that the results could serve as a basis for further management research.
The Working Capital Management1 in the role of management has a significant relevance, as a functioning WCM holds the liquidity of a company at an appropriate level and – doing so – reduces overhead costs. Also William H. Lough (*1880, †1950s), a former leading economist in the field of corporate finance discovered approximately hundred years ago that
“[S]ufficient working capital2 must be provided in order to take care of the normal process of purchasing raw materials and supplies, turning out finished products, selling the products, and waiting for payments to be made. If the original estimates of WC are insufficient, some emergency measures must be resorted to or the business will come to a dead stop” 3.
In Germany the Working Capital-Ratio4, which is the ratio for evaluating the WCM, is worse than in other European countries.5 Even if the management of German entities are giving the topic a higher priority since the early 2000s so that the ratio is improving in general, it is – especially due to the higher and more aggressive global competition – insufficient6 . This aspect is also reflected by the fact, that in average a 30 % higher liquidity is tied in the assets than necessary.7 Due to the influence of the WC-Ratio on the profitability and shareholder value of a company, this competitive disadvantage could very well weaken the whole German economy on the one hand and could make acquisitions from foreign investors easily possible on the other.8 Altogether this shows that it is necessary to carry out research on the WCM more intensively, especially in German companies.
The Global Financial Crisis with its height at the end of 2008 and the beginning of 2009 had extensive consequences on the global economy and did not only extend to the financial sector.9 Initially merely concerned this industry was impacted by an enormous loss of trust and billions of write offs. For example in 2009, the German gross domestic product10 decreased in total by 5,6 %11, what is a clear indication about how drastically and rapidly the whole economy had to react to the crisis.12 One reason for the expansion of the crisis to almost every other industrial sector was the obvious hindered possibilities of refunding for companies. The European Central Bank13 began – among other things – to decrease the central rate to 0,05 % from 4,25 % in 200814 quite early and drastically with the aim to reduce the economic outcomes of the crisis such as unemployment and the credit crunch. Its intent was to increase the propensity to consume and the investment activities among European citizens and companies.15
This thesis analyses with a quantitative empirical time comparison, how the WCM in the German DAX, MDAX and SDAX companies16 changed during the Global Financial Crisis and afterwards during the easy money policy of the ECB. In case that the actual predominant opinion17 that German companies practice their WCM pro-active is provable, the Financial Crisis and the easy money policy should only had small extraordinary effects on the WC-Ratio due to the strategic long-term orientated approach of WCM – even if it was particular hard during the crisis and particular easy after the crisis to refund companies.
On this basis, the research question is, whether the management of WC in Germany between 2004 and 2014 with every account date in this duration as the times of measurement was rather reactionary than pro-active. If the hypotheses of this thesis are provable that at first, the management intensified WCM during the crisis, because they had to do so to prevent a liquidity bottleneck, and secondly, neglected it afterwards, because the incentives of increasing profitability and shareholder value faded in the face of the low central rate, this thesis helps to evaluate the management more detailed and can be served as a foundation for additional examinations on how WCM in Germany can be improved and how German managements can focus on WCM increasingly.
In order to reach resistant results, it is mandatory to start this thesis with a literature review, showing and analysing the actual state of knowledge regarding the WCM, the Financial Crisis and also of company crises. The main reason for reviewing company crises is that if reactionary actions partly describe the WCM in Germany and indeed did took place, this management style would emerge and intensify a company’s crisis. Afterwards, the methodology will describe the empirical approach for evaluating the management’s quality with its limitations and range to make the quantitative analysis understandable and replicable. Lastly, the results of the research in general and especially regarding the companies’ size, age and industry sector will be shown – primarily with figures – and discussed with regard to the theoretical foundation of the literature review. In the end it will be possible to give a resistant conclusion regarding the research question of whether the management of WC was rather reactionary than pro-active. Furthermore the last chapter gives a forecast using a scenario of increasing central rates how big the effects of (in)sufficient WCM could be in the future.
This chapter describes the academic approaches to the WC, first in general, later more detailed and suitable to this thesis. In the second part, after shortly defining in the next part (2.2.2) what the general tasks and obligations of management are, the connection between WC and management to the term WCM will be explained with a target hierarchy (2.2.3).
The term WC in the financial sphere of a company is a generally accepted definition and can be viewed from two perspectives: From the cash-flow orientated, dynamic perception WC is considered as a circuit of liquid assets with focus on the period of time between outgoing and incoming payments. The measurement method is the Cash Conversion Cycle18 which is often used to measure the effect of WCM on profitability of companies.19 However, the balance sheet orientated static view considers the current assets on the asset side and the current liabilities on the liabilities side of a balance sheet.20
For the introduced goals of this empirical research to see changes of WCM during and after the Global Financial Crisis in duration of eleven years, the balance sheet orientated view is more suitable. This is primarily caused by the fact that the cash-flow orientated perception needs more information, is more dependent from other factors, is more short-term orientated and in addition partly needs internal data of companies as, for example, their operational goals, which is not readable in the balance sheet or the profit and loss account21 of an annual financial statement22. Nevertheless, the aims regarding WC, which will be described later, should be the same, and the analysis with the CCC can be viewed as a short-term instrument which indicates anyway the obvious results in the balance sheet so that the focus on the balance sheet orientated approach should not have major effects.23
In this balance sheet orientated perception the literature differentiates between Gross WC and Net WC. While the Gross WC is exactly the total sum of the current assets, the Net WC refers to the difference between the short-term assets and liabilities.24 The following figure shows this delimitation:
Abbildung in dieser Leseprobe nicht enthalten
Figure 1: Balance Sheet with Relevant Items for the WC25
This thesis only focuses on the Net WC, which is in the following just referred to as WC. The reason for this choice is due to the fact that the Gross WC does not have significance regarding the improvement or the worsening of WCM in companies, because it does not show the difference of the current assets to the current liabilities or at least the height of the current liabilities and is, above all, not often used as definition for WC in the literature.26
The WC indicates if a company has financed long-term assets with current liabilities (if the WC is below zero), which would be against the golden rule for balance sheet, or if it has financed short-term assets with long-term liabilities or equity (if the WC is higher than zero).27 Furthermore, the WC is a measure for the liquidity, and can be regarded as an indicator for the quality of the management due to the interrelation between WCM, profitability and the shareholder value.28 In a formula, the calculation of the WC is as follows:
Formula 1: (Net) Working Capital29
A classical defined optimum for the formula of WC does not exist, especially because the needs of liquidity and inventory, and the stock of liabilities and receivables depend on the industry sector. Generally, the WC has to be suitable for the industry sector and the size of each company and has to be, normally, above zero; however, every company may have an own optimal level of WC.30 Even if there are exceptions, this thesis assumes to make an evaluation of all DAX, MDAX and SDAX companies possible, that a decreasing WC is a kind of optimising, while an increasing WC is deterioration, supported by Wäscher (2005)31, who analysed that in average 30 % more liquidity is tied in the assets of companies than necessary.32
Ever since Adam Smith differentiated the term capital in 1770 into fixed and WC (originally ‘circulating capital’), economists recognised the importance of the topic. Nevertheless, until the 1960s research was limited to single components of WC as receivables or inventory, and the first empirical research activities about the interdependencies of all components were executed not until the 1980s, so that even with a relatively long discourse since then, for the term WC – as it is with many definitions in the economy – one valid explanation is not enforced until now, which has mainly two reasons:33
On the one hand WC as a term has a huge spread between theory and practice. In a company only the balance sheet items are relevant for the formula, which can be influenced by the management, while in the scientific theory all short-term items with a maturity under one year are recognised. For example, the rather short-term items as provisions for taxes do not flow into a calculation made by a company’s manager because of the lack of interference due to the legal obligations.34
On the other hand, the many different accounting standards as the ‘Handelsgesetzbuch’ 35, the ‘International Financial Reporting Standards’ 36 or the ‘United States Generally Accepted Accounting Principal’ 37 do not have a common obligatory structure for a balance sheet. For example, the HGB demands for a strict separation of fixed and current assets and an explanation of the maturity in the appendix of the P&L38, while the IFRS just wants the companies to sort these assets in the balance sheet by maturity39. This causes, according to the origin or the target group of the numerous publications, different definitions and approaches.40
The empirical research with the results shown in chapter 4 of this thesis analyses and evaluates the quality of and the effort for the WCM in Germany. To do so, it is mandatory to use only these items for the research that can be influenced by a company and which obligatory exist in the balance sheets of German corporate enterprises regarding to § 266 II & III HGB or IAS 1.66. In 2014, James S. Sagner41 had defined the formula according to the here needed standard as the following:
The short-term assets are all items, which are not belonging to fixed assets and which are normally transformed within one year into liquidity, like:
- Accounts receivable (from goods and services and others),
- Prepaid expenses,
- Liquidity (cash accounts and short-term investments).
The short-term liabilities are analogue to the assets normally returned within one year by using liquidity:
- Accounts payable (from goods and services),
- Notes payable (financial),
- Accrued expenses.42
Compounded is the more detailed formula of the WC used in this thesis:
Formula 2: Detailed Calculation of Working Capital
Exceptional in contrast to other definitions in this formula is the inclusion of liquidity, because as Milano (2012) says, “cash balances are often excluded, although it could be argued that some balance of cash is required to run operations” 43. Even if newer publications as by Meyer (2007), Laux (2012) or Egerer (2013)44 do not involve liquidity, it is necessary in this thesis to do so, due to three facts, which will be clarified in chapter 3.
Even if the term ‘management’ is widely spread and omnipresent, a universal definition does not exist, because the clarifications are rather dependent on the social conception of the respective authors. In the beginning, this chapter summarizes the different approaches to the term, which are in particular relevant for the term WCM in order to define the functions and roles which are the basis for the following chapters and the empirical research for the quality of the management.45
The development of management research can be characterised by two perspectives, namely an institutional and a functional one. The institutional view defines managers as the group of people who are tasked with instruction authority in a company. That leads to a huge amount of people who are managers (for example a simple shift manager). In contrast to the institutional view, the functional perspective is more focused on the tasks themselves. In conclusion, the institutional approach is insufficient for evaluating the WCM due to the lack of influence of all defined managers in this view.46
These functions, roles and also the strategic frameworks are analysed and described in detail by Mintzberg (1989)47: According to him, managers have to fulfil ten roles, which can be divided into three categories, whereas obviously nearly every of these roles is relevant for managing WC:48
Abbildung in dieser Leseprobe nicht enthalten
Figure 2: Roles of Managers49
The functions however are divided into five single terms, which also can be assigned to a circulation named ‘the classical management process’ (see Figure 3). The circulation starts with the Planning, the first function of management. In this phase, targets have to be defined. In the second function, the Organising, first steps of the implementations of plans have to be performed and more detailed tasks have to be defined. Thirdly, in the Staffing, the management has to find qualified employees or external experts to fulfil the plans. Afterwards these employees have to be led in the Directing phase, the only generally accepted direct leading function. At last in the phase of Controlling, the targets agreed on have to be monitored.50
Abbildung in dieser Leseprobe nicht enthalten
Figure 3: Classical Management Process51
These roles and functions are partly just related to the term Strategic Management as for example the planning, organising, staffing and controlling are relevant in every strategic planning and strategy process of a company. The theory of Strategic Management argues furthermore that the management is influenced by and has to orientate on the object of cognition, which can include a lot of factors like size, age, formality and centralization of a company.52
The complexity of the management research and the manifold tasks of managers carry the risk and danger, that managers are overstrained and cannot focus on all relevant topics, so that it is often understood that not all functions and roles can be fulfilled sufficiently by the management.53 Especially, if managers are put under pressure, they are willing to decide based on short-term targets, to postpone or cancel strategic plans and partly to “cross over legal and ethical boundaries to meet or beat a quota” 54. Contemporary management has rather often, especially during crisis, only the task to react appropriately to the disorders they are confronted with and have to set fitting priorities to the company’s situation.55
Due to the variety of definitions, approaches and objects of cognition, this thesis will limit the term management only to the five already presented functions inside the classical management process within huge, old market economy organisations as the object of cognition (fitting to the most of the examined companies). To what extent the management functions are relevant in the managing of WC will be analysed in the next chapters.
This part aims to merge the definition of WC and Management to an integrated view of WCM. In a first step the relevance for management due to the influencing factors of WC and their consequences for the whole company will be shown. After that the target hierarchy of WCM will be presented and put into the context of the management, the company’s structure and actual approaches.
As described above, the management in general faces a lot of challenges and it is not always possible to fulfil all tasks and roles sufficiently, especially in crisis situations. However, the management of WC is a present and relevant question for managers, so that the management should have put an increasing priority to the topic, ever since the beginning of the Global Financial Crisis 2008, and among other things due to the fact that also science focuses on the subject: after the Financial Crisis 73 articles about this topic were published by researchers only in two years, in contrast to only five articles in the duration from 2004 to 2006;56 this upward trend in the number of publication since 2007 “could be attributed due to recent economical slow down which highlighted the importance of WCM for maintaining liquidity” 57. Additional the variety of developments in the economy and the legislation as IFRS, Basel II and III should have strengthened the focus on WCM.58
WC has also influences and effects to operational targets of a company, what again proves that the management should put a high priority to the WC-Ratio. WC is financed by interest bearing capital.59 With optimising of individual parts of WC as the inventory or the receivables and liabilities, the management can increase the cash in hand balances (liquidity). This liquidity can be used afterwards for other things as investments or repayments and is not bound anymore.60
Studies as for example by Shin and Soenen (1998)61 or Deloof (2003)62 already found a strong negative relationship between WC and the corporate profitability measured by the CCC respectively by the number of days accounts receivable, inventories and accounts payable, so that “the optimal of WCM [compare chapter 2.1.1] could be achieved by a company that manages the trade off between profitability and WCM”63 . Furthermore, WC as it is financed by equity or borrowed capital costs effective money, either due opportunity costs or interest rates, which has to be earned. Especially, if the interest rates for the borrowed capital increase, the leverage effect reduces one of the most important ratios for measuring profitability, the return on equity, even stronger. Therefore, a profitability enhancing amount of WC is one of the biggest influences of sufficient WCM.64
An increased profitability and liquidity due to the improved WCM of a company would enhance the results of the due diligence process and the ratings. That would in turn, finally, increase the shareholder value of the company, which is actually the most important ratio for decisions about investments, especially in the field ‘Mergers and Acquisitions’.65
In this thesis WCM is defined as an integrated instrument of all mentioned impacts to increase this considered shareholder value of a company.66 Based on this approach and superior objective, several sub-targets are important for the management. Through the optimisation of the already explained contents of WC as inventories, receivables, liabilities and their management results the following target hierarchy:67
Abbildung in dieser Leseprobe nicht enthalten
Figure 4: Target Hierarchy of Working Capital Management68
Consequently, WCM can be described as management of the inventories, receivables and liabilities.69 However, WCM is just one part of an integrated cash management. Simultaneously, a company has to assess long-termed incomes and expenses regarding the liquidity, neutral and exceptionally gains of the period, but also risks as of the follow-up financing.70
Altogether, WCM is “primarily related with all management decisions that influence the size and effectiveness of the WC” 71 and is therefore a value-based corporate management.72
With the proven influence of the WC on liquidity and profitability, this thesis has to be embedded into the further context of a company as a whole with many operational targets. Due to the research question, in what way WCM changed during and after the Global Financial Crisis, it is mandatory to define the term ‘crisis’ in relation to the corporates’ development. In the beginning, the typical crisis process will be analysed, after that a selection of the important causes and indicators of crises will be presented and finally the possibilities of early detection will be explained shortly to build a basis for the empirical research and the concrete possible developments of the WC in times of crises in the next chapters.
A crisis is an unplanned, discontinuous development stage of a company, which represents a substantial danger with an uncertain outlet.73 A company crisis proceeds in different phases and can have multifaceted and interlocking causes, and bears the risk, if the crisis is detected too late or if the counteraction is not sufficient, to end in a bankruptcy. The statistic of bankruptcies in Germany shows, that even if the amount is reduced from 40.000 (2004) with a new peak of 33.000 during the Global Financial Crisis (2009) to 26.000 (2013), the creditors have to reckon with losses of about 30 billion Euros – every year.74
Also, if not all companies crises occur uniformly and the phases of a crisis often overlap with each other, it is possible to distinguish the following phases:75
The first phase, the potential crisis is defined by a stakeholder and a strategic crisis, so that normally the long-term potentials for success of a company are troubled. Resulting from a unity of the stakeholder, the management missed to develop a contemporary, target orientated and value enhancing strategic concept for the company.76 Strategic crises are the trigger in 60 % of all bankruptcies.77
Normally, a belated or inappropriate reaction to structural or strategic deficits is the reason for the second phase, the latent crisis. This phase is expressed by a product and sales crisis and – as a result – an earnings crisis. In a product or sales crisis, a company had failed to adapt to a developing market or to offer target group orientated products. In the earnings crises are as a consequence operational targets as revenues, profit margins or the overall return of the company unreachable.78
Lastly, if as a result of losses or decreasing profits during the earnings crisis the liquidity has dropped so far that the company is in danger of an inability to pay, the third phase, the acute crisis or liquidity crisis is reached. This phase of crisis is the last before a bankruptcy, so that the time to react and the room to manoeuvre are very small. This typical process of a company crisis is used as the basic model for the following analysis of the WCM during and after a crisis, especially the Global Financial Crisis, and is shown for the visualisation and a better understanding in the following figure:
Abbildung in dieser Leseprobe nicht enthalten
Figure 5: Typical Process of a Crisis79
Even if the typical crisis process, which applies to 60 % of all crises, is not always visible and analysable, the actual state of knowledge would make it possible for companies to search for help before the acute crisis is reached.80 The following chapter will present selected causes and indicators, which are possible to see already in an early stage of a crisis. However, only a few companies develop restructuring concepts with external help early, so that often a variety of small reasons, which all together would be to combat, brings a company into deep troubles.81
The origin of a crisis can either be caused by exogenous reasons, also referred as external, abrupt and unpersuasive reasons, or in endogenous, internal causes. As already mentioned, it is also often problematic to identify the main cause, no matter if it is an external or internal one, due to the fact that many causes occur interwoven and together, so that it is necessary to structure the causes as much as possible and show the linking of the reasons.82 Therefore, in this thesis the differentiation in exogenous and endogenous causes is not sufficient, rather a classification into external, inter-company and internal causes as Grunwald (2001)83 and Kressin (1990)84 suggested, is useful. For capacity reasons only those causes will be analysed that have influence on either the WC or the management. Obviously causes and indicators overlap each other and also the exact mapping of them to a crisis’ stadium bears problems, but nevertheless it is important to analyse not only external causes fitting mostly to the topic of the Financial Crisis, because over 80 % of all crises have internal causes and also the alleged external Financial Crisis as cause justifies internal reasons.85
In the field of internal causes for companies’ crises the most occurred ones were mistakes of the management and deficiencies in the finance and investment structure:86
Management failures are the main reason for internal caused crisis and are assigned to the potential crisis with their expressions stakeholder and strategic crisis. The causes reach from insufficient planning during the planning phase in the management process, lack of decisions on major orders due to small professionalism and competences (especially in family-run companies), deficiencies in controlling and inadaptability, uncertain strategic orientation, missing legal knowledge to faulty communication with the stakeholders, employees and the middle management.87 These deficits arise rarely separately; they occur often parallel or take place at short intervals, so that it is not possible to define the original cause in a retrospective analysis. The described possible causes in the management are often the starting point for other causes, for example in the finance structure of a company, which will be described next.88
Deficiencies in the finance and investments structure as the second most internal cause are often based on a too short-term orientated planning. Especially a breach of the golden rule for balance sheet, so that fixed assets are financed by current liabilities (as a reminder: that is the case, if the WC is below zero), is a great risk, because it can decrease the liquidity dramatically when the liabilities are payable but the money is still bound in an investment into a fixed asset. Other possible causes in this area could be extensive interest rates, especially as a result of the not matching maturities, or a management which is only focused on these rates instead on the amount of liabilities with the risk of excessive debts.89
As already mentioned the field of internal causes is very large; other possible reasons for a company crisis are for example sales problems with an drastic effect to the earnings and the liquidity, fraud in different forms or problems and mistakes in the accounting so that the cost and activity accounting is insufficient.90
The inter-company causes of a crisis contain especially one big problem, what many managers have to face: The dependence of clients or suppliers. The bad negotiation position often leads to a price or quality pressure and above all in a first step to worsening terms of payment for a company, which has a big influence to the WC-Ratio. The effect of the strategic failure of dependence to a client or supplier to the WCM will be described more detailed in the chapter 22.214.171.124
External causes often arise from not predictable effects, which concern the whole economy, but at least one industry sector. Due to this fact, companies often can react only situational. For this kind of crisis possible causes results from political, social, economic or technical problems, which demands a fast and resolute action of the management.92 Examples for external crises are the terrorist attacks of September 11, 2011, which had thrown the global economy into a crisis, or the German renewable energy law, which caused a crisis for energy companies in Germany.
The Global Financial Crisis 2008 however cannot be defined as a classical externally caused crisis for the whole economy, but for the financial industry as the also known banking crisis. The chain of circumstances led the whole economy in a crisis due many factors as sinking trust to business partners, political isolation, credit crunches and the expansion to a currency crisis of the Euro.93 However, even if this crisis is not fitting to a classical, strict analytic definition, this thesis assumes that the Financial Crisis was an externally caused crisis for companies all around the world due to the impossibility of the management to react appropriate while the initially small crisis of the United States real estate bubble was developing in under one year to a crisis of an unimaginable extent – even if good management of numerous companies were able to absorb the hardest consequences.94 The Global Financial Crisis, the reaction to it, and the influence and effects to the WCM as the basic for the empirical research are described more detailed in chapter 2.3.
It is indisputable that a company crisis is recognisable at an early stage, even if the individual causes and phases become blurred with each other.95 This chapter will shortly explain the way to detect crises by balance sheet analysis and one way for intervention based on the already existing literature.
The classical balance sheet analysis consists of the analysis of ratios based on the balance sheet of an AFS and can contain up to 200 different ratios. The more modern approach takes the whole AFS including the appendix and the situation report into account, so that a more integrated view can be drawn.96 However, the significance of each aspect has to be monitored. Simultaneously the analyst has to arrange the determined ratios by relevance for evaluating the company and give them a weighting factor. In any case he has to reject every ratio without significance for the company depending on the industry sector, age, size and organisational structure. For example, a family-ran company does have normally a completely own finance structure because of a higher equity.97
Nevertheless the AFS analysis has limits. Soft factors as the competences respectively the knowledge of the employees cannot be evaluated sufficiently based on ratios. Furthermore all ratios have to be considered in the context of the economy and the object of cognition. These difficulties are rated by modern analysis system as the system of neural networks or the by Weinrich/Brokmann (2009)98 developed ‘ crisis alert radar ’: This radar is the by priority and relevance sorted visualised presentation of all important early detection indicators and is with this approach useable as an instrument for the external AFS analysis as well as for internal intervention actions in the strategy process.99 Typical interventions were in the Strategic Crisis Management the retreat from unsustainable markets (strategy of withdrawal) or the expansion to new markets (offensive strategy), but also in the Operating Crisis Management the reducing of overhead costs and inventories, which would influence directly the WC-Ratio.
For the evaluation of the WCM based on the WC-Ratio are the classical approaches sufficiently, even if this analysis type lacks in the inclusion of soft factors in many areas. The indicators for an early detection based on the prior chapter with the associated crises phases are provided in the appendix A100. The WC-Ratio as a ratio which is calculated by hard factors of the balance sheet can be compared internally to prior periods and also externally to comparable companies of the same industry sector, which is adequate. Furthermore, based on the changes of the WC, it is possible to evaluate the quality of the management not in general, but in the terms of WCM. The detailed explanation how the transition from the WC-Ratio to the quality of the WCM works is to find in the methodology chapter 3.
As mentioned in chapter 2.1.3, insufficient WCM affects the profitability, the liquidity, the rating and, as a consequence, the value of a company. This chapter will show these effects in the application of the crisis and management process to give a theoretical basis for the expected changes of the WCM during and after the Global Financial Crisis.
An insufficient WC-Ratio can be a cause for an earnings crisis or a liquidity crisis, but also an indicator for an insufficient management. Caused by strategic failures in the planning and organising phase of the management process, the management had at least missed to stuff and direct the tasks and targets to the employees, for example the lower management, or the controlling of the company lacks in effectiveness.101 The following figure shows the influence of the strategic planning to the WCM and the possible consequence, that a company could slide in an acute crisis situation.
Abbildung in dieser Leseprobe nicht enthalten
Figure 6: Influence of Insufficient Working Capital Management during Crisis102
A liquidity crisis can result, as already mentioned, from different causes, but most are arisen by failures of the management in the strategic planning and are attributed to internal causes as weaknesses in the decision-making, which are hard to identify. If a company falls into a crisis, the WCM has to be optimised, even if the management is confronted with other, maybe harder problems. This is especially valid, if external causes and factors come along – as in the Global Financial Crisis. For example, in the inter-company causes, the payment terms towards the customer and suppliers have major influence on the liquidity and the WC-Ratio of a company due to the increasing receivables and decreasing liabilities if the partners have too much power due to failures in the strategic management. Particular in a liquidity crisis situation of a company their suppliers start to worsen the due date of invoices up to a request for cash payments or even prepayments, so that the most important counterpart to the current assets in the WC calculation, the current liabilities from goods and services, are falling down to zero with the consequence of even harder liquidity problems and a worse WC-Ratio.103
Even if the field of the WCM is normally not the only cause or the fitting indicator for a crisis situation – a much more relevant problem is the variety – the WC is a possible adjusting screw for the management due to their influence to companies’ targets, so that the WCM plays more and more a key role in the prevention of liquidity crises.104
Especially an effective controlling can ensure the detection of insufficient WCM as well as a liquidity crisis in an early stage. In the controlling many indicators of insufficient WCM as provided in fat letters in appendix A105 are recognisable, so that the management could act based on the idea that in liquidity problems first all intern possibilities are to exploit fully before extern investors are contacted.106 For this reason WCM has become more important for the financial restructuring of companies.107
In general, in crisis situation, which are of course only partly caused by insufficient WCM, a proper management of the liabilities, receivables and the inventory can prevent crises or, at least, can prevent a worsening of an already existing crisis. Typical actions of a company in this area would be the reducing of receivables by for example by factoring or the adaptation of payment terms, the reducing of the inventory by for example implementation of just-in-time delivery or the reducing of the base stock but also balance sheet changing actions such as the valuation of the inventory.108 That is why it is not understandable, that only a “few organizations (if any) have a functional position for working capital manager” 109.
Therefore, if the literature analysed before is justified, the WC-Ratio of a company would be improved more in a crisis situation than in the normal development phases, even if it has enhanced in general since the beginning of the 2000s in Germany110, especially because the WCM in crisis situations has the aim to overcome liquidity bottlenecks.111 Regarding the literature, the course of the WC-Ratio in a figure would be as follows:
Abbildung in dieser Leseprobe nicht enthalten
Figure 7: By Literature Expected Changes of the WCM Quality112
The following two chapters will analyse the changes of the WC-Ratio during and after the Global Financial Crisis with their influences on a theoretical approach and moreover define the hypotheses for the empirical research.
Without going into a depth regarding the causes and effects, this chapter will provide only the biggest influences of the Global Financial Crisis to the German real economy and will analyse how WCM should have changed during this crisis.
The German real economy was confronted at the latest since the height of the crisis in the end of 2008 and the beginning of 2009 with many problems.
On the one hand, the developing countries stagnated for the first time since years, what especially for Germany as an export nation was a problematic situation. Also the global trade decreased and the boom of the shipping ended radically. Finally, the European domestic demand collapsed due to the highly increasing unemployment quotas and the increased insecurity in the general public. All that caused a sales crisis in many companies and reduced their contribution margin, the earnings before interest and taxes113 and lastly, the profit, so that the companies slipped into an earnings crisis due to the impossibility for companies to reduce the overhead costs and to cut their obligations to the same extent.114 However, even if the impacts were comparable in the beginning of the crisis to the world economic crisis of 1929, the mentioned causes of the companies’ crises as the result of the external Financial Crisis and their impacts are only partly influenceable by the companies themselves.115 Furthermore they are only relevant for evaluating the changes of the WCM during the Financial Crisis with their result, as they are reducing the earnings and liquidity of the companies, so that the processes will not be discussed in a more detailed manner.
On the other hand companies all over Germany had to face a credit crunch. Regularly, companies in a crisis situation have problems in their refunding due to their worse rating. Investors just see better options or demand for higher risk premiums. However, in the Global Financial Crisis companies had to face increased requirements and claims of their investors independently from their own situation.116 A research by the National Bureau of Economic Research in Cambridge (2010)117 showed that overall approximately 60 % of all examined companies were at least somewhat affected by credit or financial constraints due to a quantity or a price constraint. That value was two times higher compared to normal times before the global crisis showing that the impact of the credit crunch in the Global Financial Crisis was higher than in regularly passing companies’ crises.118
The impacts of the Global Financial Crisis to the real economy are especially unambiguous in the production indices in the EU and the USA:
Abbildung in dieser Leseprobe nicht enthalten
Figure 8: Production Indices in the EU and the USA 2002 – 2010 in Percentage119
Confronted with these developments, many companies focused on securing their existence with the action to reduce costs due to the impossibility to influence the sales in this partly external caused crisis.120 One possibility was to optimise the WC-Ratio in the integrated cash management to a proper level and to hold the liquidity, because of the general credit crunch, just on the needed level.
Altogether, the Global Financial Crisis increased the attention to WCM considerably121, so that it is to be expected, that the WCM during the Global Financial Crisis improved more than in the prior chapter described extent because above the sales and earnings problems which are existing in nearly every company crisis, companies had to face in the end of 2008 and the beginning of 2009 a credit crunch of exceptionally dimensions, which should have enhanced the motivation to better up the WCM.
Since the beginning of the Global Financial Crisis, politics and the independent central banks took countermeasures with effects to the economy from approximately the fourth quarter of 2009. This chapter will summarise only the activities of the German government, the ECB and the German central bank ‘Deutsche Bundesbank’ to give a theoretical estimation, which influences and effects of these actions existed regarding WCM in Germany.
The German government started two stimulus packages to accelerate the economic recovery of the German companies and also tried to support other European countries as a member of the European Union122. The second one was decided in 2009 and comprised as an action plan amounting to 50 billion in volume among other things a demand increasing investment plan, the famous scrapping bonus and tax cuts. Especially the scrapping bonus and the increase of the official demand were a support for at least the European economy due to the free movement of goods, but the biggest profiteer were the German economy, so that already in 2010 the German GDP increased by 4,2 %, while the GDP in other member states of the EU increased in average only by 1,8 %.123 The scale of the crisis is clearly visible in the parliamentary discussion around the second stimulus package, as the German government had to determine regarding to Article 115 of the German constitution that the supplementary budget is a disorder of macroeconomic equilibrium, which has never happened before because of an economic crisis.124 Other political interventions against the crisis were for example the setup of the European Stability Mechanism 125 by all member states of the EU, which supported dropping countries with guarantees and emergency credits to enable them to practise an own active economic policy and to facilitate their own refunding.126
However, also the ECB was involved in the rescue programs. As a consequence of the crisis and to support the economy, especially the European banking system, the ECB started two own actions plans: The Securities Markets Programme 127 was a from 2010 to 2012 existing agenda to enable the ECB to buy governments bonds with the aim to equip banks in the euro zone with sufficient liquidity and to fulfil their own main target of price stability.128
The second action plan of the ECB, the Outright Monetary Transactions 129 Programme was introduced as follower of the SMP in 2012 and enabled the ECB to buy short-termed governments bonds in unlimited height from the secondary market with the aim to calm down the capital market and to create trust into it. With that programme, the ECB has been developed to a so called ‘lender of last resort’, which is contrary to the market economy system due to the fact that a lender of last resort provides loans to borrowers, which are originally excluded from the market.130 Both action plans of the ECB were legally disputed and are in their targets close to the ESM.131
Simultaneously the ECB merged in 2008 the tender procedures, which are important for the controlling of the interest rates and liquidity, from variable rate tenders back to the quantity tenders. With the participation in the tender procedures commercial banks refunding themselves and have to deposit securities in return. The quantity tenders performed since 2008 are however not the classical ones from the time before the introduction of the Euro. The duration has expanded up to three years (since 2011) and the ECB practises a full allotment policy. That means that every commercial bank which participates gets the full required amount – nearly independently from their creditworthiness. These changes and actions were made to ensure that the reduction of the central rate since 2008 radiate to the real economy, which was stuck in a credit crunch since the beginning of the Global Financial Crisis (see prior chapter).132
The following figure shows the actions of the ECB which all had the aim to support and stimulate the European economy as a whole, especially the investment and within that the refunding of the real economy with lower interest rates and smaller constraints.
Abbildung in dieser Leseprobe nicht enthalten
Figure 9: Actions of the ECB and the EU against the Global Financial Crisis133
Even if the actions with the aim of stimulating the economy made by the ECB and the governments of the EU member states were weakened by regulations as Basel II or III due to their requirements to the equity of banks,134 the programs had success, so that the interest rates for the refunding in Germany were falling since the end of 2008 from over 5 % to actually under 2 %:
Abbildung in dieser Leseprobe nicht enthalten
Figure 10: Changes of Interest Rates for New Loans to Companies135
Altogether, the ECB policy had reduced the interest rates for the refunding of German companies and made the barriers for refunding smaller and if, as this thesis wants to examine, the WCM of German companies is reactionary and influenced by external factors, the WC-Ratio of German entities must have been worsened due to the easier and cheaper refunding since the end of the Financial Crisis and the beginning of the easy money policy of the ECB in 2010, or at least, must have been unanchored to the crisis period, just because the utility of WCM for sourcing liquidity and the impact to the profitability had decreased. However, the central rate already decreased in 2009 drastically and as a consequence, the refunding was already from this moment cheaper and easier for companies, so that the described effects of the Global Financial Crisis (see prior chapter) with an improvement of their WC-Ratio and their WCM should have already overlaid from 2009 by the ECB policy. Putting all facts into this analysis, the expected changes of the WCM as the hypothesis for the empirical research are the following:
Abbildung in dieser Leseprobe nicht enthalten
Figure 11: Expected Changes of the WC-Ratio - Literature vs. Hypothesis136
This chapter explains without going deep into the basic literature about methodology how the research in this thesis was performed, how it will be presented and which specialities were observed. In the end limitations will be analysed. The methodology also helps to create a replicability of the research and to make the results comprehensible.
The quality of WCM in Germany, the dependent variable in the research, was measured in terms of the changes of the WC-Ratio before, during and after the Global Financial Crisis on an annual basis from 2004 to 2014. The date of measurement are in each year the individual provided data from of a particular date created AFS, mostly per December 31. Because the WC lacks a definable optimum, a time comparison suits to the approach to evaluate the quality of the management regarding to the opinion of the literature that the management should have been improved since the 2000s.137 It concerns about observations in hindsight: The hard WC data as the consequence of the acting of the management are evaluated to check the quality of the decisions which created these same WC data.138
The WC as it is defined above in chapter 2.1.1 has to be set in relation to a value, which changes as the WC does with the size and the profit of a company. For this approach, after testing the correlation between both values139, it is sufficient to set the WC in a ratio to the revenues to the following analytic model:
Formula 3: Working Capital – Ratio140
As mentioned earlier, the liquidity is included to the term WC in this thesis due to three facts. Firstly, the liquidity is controllable. The WC contains only short-term items that are under influence of the management, so that the liquidity has to be integrated if the management’s quality regarding the WC should be evaluated in total. Secondly, some balance of cash is required in every company. This balance changes as the first item before, during and after a crisis because, as mentioned, the earnings influence the liquidity. Especially in the described credit crunch of the Global Financial Crisis and the following easy money policy starting as early as 2009, liquidity would change directly and first of all. For example, if a worse management had financed their company in the time of the easy money policy with a lot of fresh money (as a part of the WC), it is important to integrate that fact to the management’ quality analysis. Thirdly, the German HGB141 demands for the integration of liquidity to the current assets, so that an analysis of the current assets and liabilities in the WC of German companies has to include the liquidity – also legally considered.142 However, an ‘optimum’ of liquidity is – as the WC – not definable due to the variety of influences, so that for the liquidity only a time comparison is suitable too.143
Another way for evaluating the WC would be with the CCC, but the benchmarks along the industry sectors are limping because of the influence of inventory coverage. This dynamic approach would be interesting if only one industry sector would be examined.144
1 Hereafter: WCM.
2 Hereafter: WC.
3 Lough (1917), 355.
4 Hereafter: WC-Ratio.
5 Cf. PwC (2011), 4, 15-16.
6 Cf. Dengl (2012), 1.
7 Cf. Wäscher (2005), 118.
8 Cf. Deloof (2003), 584-586; Lazaridis/Tryfonidis (2006), 11; Bhunia/Das (2012), 966.
9 Cf. Sahlmann (2009), 3-5.
10 Hereafter: GDP.
11 Cf. Statista (2014a).
12 Cf. Schulte-Mattler (2009), 29-30.
13 Hereafter: ECB.
14 Cf. Finanzen.net (2015).
15 Cf. Gerlach/Lewis (2014), 866-867, 883.
16 The DAX is the German leading share index with the 30 biggest entities regarding to their market capitalization, the MDAX (mid-cap) and SDAX (small-cap) are following the DAX by height.
17 Cf. Dengl (2004), 1; PWC (2011), 11-14; Dengl (2012), 1; Scholleova (2012), 91; Michalski (2014), 2-3, 6; Deloitte&Touche (2015), 1-3.
18 Hereafter: CCC.
19 Cf. Egerer (2013), 19-20; Singh/Kumar (2014), 175.
20 Cf. Klepzig (2008), 16.
21 Hereafter: P&L.
22 Hereafter: AFS.
23 Cf. Egerer (2013), 20-21, Werner (2014), 122-123.
24 Cf. Singh/Kumar (2014), 174-175.
25 Own representation based on Meyer (2007), 25.
26 Cf. Egerer (2013), 16-17.
27 Cf. Meyer (2007), 23-26.
28 Cf. Gleich/Horváth/Michel (2011), 245-250.
29 Cf. Egerer (2013), 15.
30 Cf. Deloof (2003), 573-574.
31 Cf. Wäscher (2005), 118.
32 Cf. Wäscher (2005), 118.
33 Cf. Meyer (2007), 3, 23-26.
34 Cf. Eilenberger/Ernst/Toebe (2003), 347.
35 Hereafter: HGB (German commercial code).
36 Hereafter: IFRS.
37 Hereafter: US-GAAP.
38 HGB § 266 II & III.
39 International Accounting Standard (hereafter: IAS) 1.66 of the IFRS.
40 Cf. Egerer (2013), 18.
41 Cf. Sagner (2014), 2-5.
42 Cf. Sagner (2014), 2-5.
43 Milano (2012), 1.
44 Cf. Meyer (2007), 28-32; Laux (2012), 1-3; Egerer (2013), 15-17.
45 Cf. Meyer (2007), 30-31.
46 Cf. Schreyögg/Koch (2010), 6-8.
47 Cf. Mintzberg (1989), 29-30, 107-121.
48 Cf. Mintzberg (1989), 29-30.
49 Own representation based on Mintzberg (1989), 30.
50 Cf. Gladen (2014), 1-2.
51 Own representation based on Schreyögg/Koch (2010), 12.
52 Cf. Mintzberg (1989), 107-121; Ketchen/Shook (1996), 441-442.
53 Cf. Schreyögg/Koch (2010), 20-26; 38-45; 53-60.
54 Sahlmann (2009), 3-4.
55 Cf. Meyer (2007), 33-34.
56 Cf. Singh/Kumar (2014), 178.
57 Singh/Kumar (2014), 178.
58 Cf. Egerer (2013), 6-7.
59 Cf. Schneider (2004), 147-150.
60 Cf. Bleiber (2009), 23-26.
61 Cf. Shin/Soenen (1998), 37-45.
62 Cf. Deloof (2003), 585.
63 Bhunia/Das (2012), 966; also these authors do not work with a fixed optimum.
64 Cf. Knauer/Wöhrmann (2013), 82-84.
65 Cf. Aktas/Croci/Petmezas (2015), 111-113.
66 Cf. Aktas/Croci/Petmezas (2015), 104-106.
67 Cf. Egerer (2013), 22-23.
68 Own representation based on Egerer (2013), 22.
69 Cf. Werner (2014), 122.
70 Cf. Rao (2009), 144-145.
71 Singh/Kumar (2014), 174.
72 Cf. Shin/Soenen (1998), 32.
73 Cf. KWT (2010), 2.
74 Cf. IFM (2014).
75 Cf. Kressin (1990), 43-44.
76 Cf. Weinrich/Brokmann (2009), 13-16.
77 Cf. Fischer (1998), 152.
78 Cf. KWT (2010), 2.
79 Own representation based on Fischer (1998), 152.
80 Cf. KWT (2010), 2-4.
81 Cf. Grunwald (2001), 9-13.
82 Cf. Hauschildt (2000), 2.
83 Cf. Grunwald (2001), 9-10.
84 Cf. Kressin (1990), 47-49.
85 Cf. Schlebusch/Volz/Huke (1999), 452.
86 Cf. Kressin (1990), 90.
87 Cf. Rutsch (2007), 17-20.
88 Cf. Rutsch (2007), 18.
89 Cf. Grunwald (2001), 39.
90 Cf. Kressin (1990), 73-74; Rutsch (2007), 25.
91 Cf. Müller (1985), 41-42.
92 Cf. Grunwald (2001), 33.
93 Cf. Scholleova (2012), 80-81.
94 Cf. Schulte-Mattler (2009), 29-30.
95 Cf. Kash/Darling (1998), 183-184.
96 Cf. Littkemann/Krehl (2000), 19-21.
97 Cf. Littkemann/Krehl (2000), 19-21.
98 Cf. Weinrich/Brokmann (2009), 12-14.
99 Cf. Weinrich/Brokmann (2009), 21-22.
100 Appendix A: Matrix of Causes, Indicators and Phases of Crisis, page IX.
101 Egerer (2013), 22-23.
102 Own representation based on Fischer (1998), 152.
103 Cf. Kressin (1990), 80-82.
104 Cf. Jünger (2009), 295.
105 Appendix A: Matrix of Causes, Indicators and Phases of Crisis, page IX.
106 Cf. Kraus/Buschmann (2009), 149.
107 Cf. Kraus/Buschmann (2009), 139-140.
108 Cf. Müller (1985), 41; Bleiber (2009), 23-26.
109 Sagner (2014), 5.
110 Cf. Dengl (2004), 1; PWC (2011), 11-14; Dengl (2012), 1; Scholleova (2012), 91; Michalski (2014), 2-3, 6; Deloitte&Touche (2015), 1-3.
111 Cf. Buchmann (2009), 350-351.
112 Own representation.
113 Hereafter: EBIT.
114 Cf. Hofmann/Maucher (2011), 1-3.
115 Cf. Schulte-Mattler (2009), 32-33.
116 Cf. Brunnenmeier (2008), 21-23.
117 Cf. Campello/Graham (2010), 26-27.
118 Cf. Campello/Graham (2010), 26-27, 31.
119 Eurostat (2010); Development of the production indices in percentage from 2002 (Index 100) to 2010.
120 Cf. Hofmann/Maucher (2011), 4.
121 Cf. Egerer (2013), 7.
122 Hereafter: EU.
123 Cf. Eurostat (2015).
124 Cf. Barabas/Döhrn (2009), 129-130.
125 Hereafter: ESM.
126 Cf. Gerlach/Lewis (2014), 882-883.
127 Hereafter: SMP.
128 Cf. Dt. Bundesbank (2010), 118-120.
129 Hereafter: OMT.
130 Cf. Winkler (2013), 683-684.
131 Cf. Winkler (2013), 678-679.
132 Cf. Gerlach/Lewis (2014), 882-883.
133 Own representation based on in this chapter used literature.
134 Cf. Schulte-Mattler (2009), 27-28.
135 Cf. Statista (2014b), own translation.
136 Own representation.
137 Cf. Dengl (2004), 1; PWC (2011), 11-14; Dengl (2012), 1; Scholleova (2012), 91; Michalski (2014), 2-3, 6; Deloitte&Touche (2015), 1-3.
138 Cf. Larsson (1993), 1525-1527.
139 Correlation Test: Appendix G: Data analysis and foundations for the WCM tests, page L.
140 Cf. Meyer (2007), 23-26; Egerer (2013), 15-17; Sagner (2014), 2-5.
141 Cf. § 266 I HGB.
142 Cf. Buchmann (2009), 352-354.
143 Cf. Buchmann (2009), 351-353.
144 Cf. Werner (2014), 125.
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