Firms may have an optimal level of working capital that maximizes their value. Large inventory and generous trade credit policy may lead to high sales. The larger inventory also reduces the risk of a stock-out.
Trade credit may stimulate sales because it allows a firm to access product quality before paying [2, 6].
Another component of working capital is accounts payables. Raheman and Nasr [2] state that delaying payment of accounts payable to suppliers allows firms to access the quality of bough products and can be inexpensive and flexible source of financing.
On the other hand, delaying of such payables can be expensive if a firm is offered a discount for the early payment. By the same token, uncollected accounts receivables can lead to cash inflow problems for the firm.