Entities delaying payments in times of crisis and its impact on profitability

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The current crisis has brought to the forefront the importance of managing components of working capital efficiently. This study addresses the impact of the crisis in two of its components, trade credit offered and demanded, and the subsequent effect on profitability. For a sample comprising listed firms in Greece, Italy, Portugal and Spain, for the period of 2004 – 2011, it is found that an economic downturn affects the days a firm takes to collect its receivables and to pay its suppliers and that there is a significant relation between those variables and the firm´s profitability.