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National Research University Higher School of EconomicsStudent ThesesEvaluation of company's trade credit policy efficiency
Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Boris Fateev
Evaluation of company's trade credit policy efficiency
Faculty of Economics
Bachelor’s programme
2014
The theme of this graduation thesis is «evaluation of trade credit policy efficiency». It contains 13 images and 10 tables. The total extent of thesis is 47 pages. To prepare the thesis 30 various sources were used. Key words: working capital, accounts receivables, trade-credit policy, trade credit, financial cycle.An aspiration of commercial companies to increase sales without essential changes in production often leads to decision of trade with delay of payment. Delays in payments are called trade credit. A policy, connected to trade credit management is called trade-credit policy. Large dimension of trade credits could lead to essential increase in sales, but also a high risk of accounts receivables delinquency. Consequently, the main dilemma of trade credit policy is the balance between profitability and risk. It's an up-to-date issue for Russian national market because there is a lack of usage of trade credits on this market. In most cases salesmen choose an absolute stability in the prejudice of increase of profitability by avoiding trade credits at all.The goal of this thesis is the evaluation of trade-credit policy's efficiency for "Heineken Breweries" Ltd. To evaluate that we use the trade-credit policy of the company and study financial and economic circumstances of its application.During examination of relevant literature we revealed the fact, that the theme is better examined by foreign scientists than Russian. The most of theoretical and empirical researches belong to foreign economists, and a general mechanism of trade-credit policy creation for Russian market isn't completely studied.The thesis has a mark of scientific novelty, which is a revelation of trade-credit policy creation mechanism for Russian market. Also it contains mechanism's application for specific Russian firm.Practical part of the thesis includes conclusion about "Heineken Breweries" Ltd. trade credit policy efficiency, and could be used by its management to develop relations with consumers as well as by any other Russian companies after relevant application of constructed pattern.In the first part of the thesis "Theoretical basis of trade-credit policy creation" we examined indexes, which in general describe trade-credit policy. Possible interconnections between these indexes were described. The list of factors which could influence trade credit policy was constructed and possible effects of trade-credit policy change for key financial indexes were predicted.In the second part of the thesis "Trade-credit policy of "Heineken Breweries" Ltd. analysis" there is a description of data used in the thesis, examination of interconnection between potentially affluent factors and trade credit policy and a construction of normal trade credit policy determination pattern. Also the second part includes comparison of the company's trade credit policy with Russian norms of cooperation.As a result of research 2 factors affecting trade credit policy of Russian companies were revealed - the profitability to current ratio proportion and the average growth of assets for last 3 years.Basing on constructed patterns the optimal level of accounts receivables turnover was predicted for "Heineken Breweries" Ltd. The predicted turnover is 57 days and the real turnover is 56 days. After matching these 2 indexes with 95% confidential interval we conclude, that they are equal. That means that the company's trade credit policy isn't deranged for Russian market. In addition to high sales for its market segment that leads to the conclusion that the company's trade credit policy is efficient and there is no necessity to change it.

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