What Determines the Firm’s Net Trade Credit? Evidence from Macedonian Listed Firms
Abstract: This paper analyses the net trade credit and its determinants for a sample of 25 non-financial firms for the period 2011-2013. The sample is derived from the Macedonian Stock Exchange. The net trade credit is the dependent variable. The dependent variable is defined as the difference between trade receivables and liabilities, and then this difference is divided by total assets. The maturity structure of assets, profitability, inventory investment, cash to assets ratio, long-term financing, total debt financing, and converting sales into cash are the independent variables. This study used the Shapiro-Wilk W test for normality, Kernel density estimation, Variance Inflation Factor for multicollinearity, and the model specification link test for single-equation models. The obtained results show that more profitable firms and with higher current assets and cash ratio have positive net trade credits. The net trade credit is significantly negatively associated with inventory to total assets ratio and net cash flows from operating activities to sales. On the other hand, the net trade credit is significantly positively associated with current assets to total assets ratio and profitability.
International Burch University