oa Net Trade Cycle And Operating Cash Flow

This paper examines the relation between the net trade cycle as a measure of the efficiency of working capital management and operating cash flow of firms listed in the main US stock markets. The relationship is examined using dynamic panel data analysis. The analysis based on a sample of 5802 U.S. non-financial firms. The analysis is applied at the levels of the full sample and divisions of the sample by size. The results show negative and significant relation between the length of the net trade cycle and operating cash flow for the full sample and for all size levels. These results suggest that managers of the US non-financial firms can increase operating cash flow of their firms by shortening the net trade cycle.