FOLLOW

FOLLOW

SHARE

The 2001 Working Capital Survey

The downturn in the economy calls into question the viability of reducing working capital to the bare minimum.

2Jul



Forget the Float?
In a tough operating environment, negative working capital isn't always a plus. By Ronald Fink



2001 Working Capital Survey Charts

Click on an industry to view the companies best able to squeeze cash flow out of working capital.






Behind the Rankings




The management of working capital combines two measures, weighted equally:

1. Days of Working Capital (DWC) = (Receivables + Inventory ­ Payables) ÷ (Sales ÷ 365 Days). If payables exceed the sum of receivables and inventory, DWC is negative.
2. Cash Conversion Efficiency (CCE) = Cash Flow from Operations ÷ Sales.

The overall ranking: (Highest Overall CCE ­ Company CCE) ÷ (Highest Overall CCE ­ Lowest Overall CCE) + (Lowest Overall DWC ­ Company DWC) ÷ (Lowest Overall DWC ­ Highest Overall DWC). Days of Sales Outstanding (DSO), Inventory Turns, and Days of Payables Outstanding (DPO) are not part of the overall ranking criteria. Industry averages consider all companies in an industry, not just the top five.

Sources: REL Consultancy Group, Piranha Web

Comments

comments powered byDisqus
Wrestlingring

Read next:

Becoming a Value Integrator: A CFO Journey

i