Current assets and procedures for financing them can be analyzed and measures can be taken for efficient management of various components, decisions are usually taken internally within the context of the firm's overall financial plan. While the larger firms are found to operate efficiency in working capital management, small and medium-sized enterprises (SMEs) often face the challenge and a recent study as follow

Farrah Wahieda Kasirana et al., "Working Capital Management Efficiency: A Study on the Small Medium Enterprise in Malaysia", Procedia Economics and Finance, Vol 35, 2016, available online

https://mafiadoc.com/working-capital-management-efficiency-a-studyon-the-small-_59ea62441723ddb9e0b6a1a2.html

conducted in Malaysia tends to support this. By analyzing the efficiency of working capital management with the help of three indexes, the results reveal that the selected SMEs were less efficient in managing their working capital during the sample period (2010-13). The situation is likely to worsen in the current pandemic situation. You are appointed a consultant to the Association of Small and Medium Enterprises in Malaysia and the President of the organization is asking for your help in designing policies for effective working capital management of their members. While you may give necessary guidelines based on your own research of working capital management and experience of other countries including your own, you are expected to address the following questions in your report:

Define trade credit and explain the difference between free trade credit and costly trade credit with the help of a numerical example. Evaluate the efficacy of trade credit as a means of short-term financing by producing some evidence. Do you think short-term bank loans would be more useful for small business firms? Justify your answer