Research On Working Capital Management In Industrial Chain Integration

In order to improve the competitiveness of agriculture,China has encouraged agricultural enterprises to carry out industrial chain integration strategy in recent years.However,agriculture is the industry with heavy assets and the implementation of industrial chain integration requires a lot of capital investment,which pushed forward to a higher standard for working capital management.In this essay,Huaying Agriculture Company,the only listed company in duck cultivation industry which has put much effort on promoting industrial chain integration has be taken for the case.After the analysis of the size,structure,and mobility of Huaying's working capital,the company's working capital shows large scale of funds,unbalanced structure and weak mobility.From the perspective of element and channel,this report evaluates the performance of the company's working capital management and concludes four major problems in working capital management of Huaying Agricultural Company.Firstly,massive purchase materials at low price leads to hoarding.Secondly,balance of account receivable is significantly high because of the loose credit terms in down business.Thirdly,the establishment of selling terminal could not keep the pace of capacity expansion,which limited the speed of destocking.Lastly,the amount long-term funds could not meet the needs in industrial integration,and increase the pressure of cash flow.The following suggestions are given to solve these major problems.Firstly,applying joint stock management and holding futures contract to control procurement cost and the amount of stock.In addition,for down business which has relatively higher value,the company is expected to enhance the credit evaluation system of customers for account receivable management,and reduce pressure of working capital by collecting partial payment on goods in advance.Thirdly,Huaying should improve the terminal construction of industrial chain,for better perceive the market demands and speed up destocking.Last but not least,the company could develop financing instruments inside industrial chain,for a balanced asset-liability structure with lower short-term debts.