Working capital management in the COVID-19 economic crisis: the case of non-financial enterprises listed in the IPC

Abstract

The purpose of this study is to analyze the working capital management (WCM) strategies followed by non-financial firms listed in the IPC during the Covid-19 economic crisis, by estimating the target level of working capital requirements. We classify firms by operations in different geographies. Then we employ a regression analysis of random effects to estimate the working capital requirements (WCR) of the different firms, by regions, to understand the strategies of WCM. The study was conducted for the period 2018q1-2020q2, for which we have data available but also comparison for normal times (2018q1- 2019q4) vs Covid-19 times (2020q1-2020q2). The contribution is to describe the WCM practices in Mexico, because of the lack of studies of this kind, but also to analyze these practices in periods of economic crisis, where the working capital use to be high. The conclusion is that the WCR are related to the gross margins, but also that firms that have operations in locations different than Mexico have a better WCM.