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Working Capital (Inventory Days (Raw material / Purchases, Work in…
Working Capital
Inventory Days
Raw material / Purchases
Work in Progress / Cost of Sales
Finished goods / Cost of Sales
Debtors / Sales
Creditors / Purchases
Shorten WCC
Reduce time raw materials spend in inventory
Reduce time to convert raw materials into finished goods
Reduce time to sell finished goods
Reduce time to receive cash from debtors
Lengthen time taken to pay creditors
Risks of aggressive policy
Lower sales
Lower liquidity
difficulty in paying off accounts payable
Forecasting WC
Percentage-of-sales
Current assets as % of sales
Net working capital = current assets - current liabilities