A study on cash flow management in medium-sized and small manufacturing companies in Yamagata Prefecture

Since the year 2000, there has been an increasing visibility of proposals and theoretical research on the importance and necessity of cash flow management in small and medium-sized enterprises (SMEs). The purpose of this paper is to focus on six medium-sized and small manufacturing companies in Yamagata Prefecture that have been in business for over 50 years. The objective of this study is to elucidate their management overview, with a particular focus on the details of their management strategies, as perceived from a financial perspective. Moreover, the objective is to identify commonalities in sustainable management styles and the unique characteristics of each company for analysis. The research method employed involved on-site interviews, utilising a standardized questionnaire for each company. The results and analysis of the research are summarised as follows: The following four stages were employed in the research: Classification using a positioning map, graphing the overview of the six selected companies and the relationship between their interest-bearing debt ratio and equity ratio. Analysis of the commonalities and unique characteristics in the management strategies of the six selected companies. Analysis comparing the findings with the paper on “sound management.” Analysis of cash flow management and funding strategies. The results of the study yielded the following findings. With regard to the equity ratio and the interest-bearing debt ratio, five of the six companies exhibited figures that were generally regarded as acceptable benchmarks. The remaining company, however, demonstrated a commitment to environmental sustainability, thereby raising questions regarding the principles of sustainable management. Nevertheless, it became apparent that this company shares information such as its cash flow statements with financial institutions, thereby establishing a mechanism enabling rapid fund raising.