Welcome to the 2017 McGrathNicol Advisory Working Capital Report, prepared by our Cash and Working Capital Centre of Excellence. This report profiles the working capital performance of a sample of 160 ASX listed companies across the Building Products, Construction & Engineering, Food & Beverage, Leisure, Media, Mining & Resources, Retail, Transport & Distribution and Utilities sectors. The combined market capitalisation of the companies included is $738.6 billion, representing 86% of the total for the selected sectors. The information is based on the most recent full-year results for 2017, compared to 2016 results.

The average working capital cycle of the sampled companies lengthened in 2017. This translated to the equivalent of c.$288 million in additional cash being held in working capital. Not all businesses in the sample experienced a “lock up” of cash, with 53% actually delivering an improvement in metrics, meaning a material competitive advantage can be achieved by implementing best practice.

Overall, the amount of cash tied up in working capital increased in 2017 compared to 2016 due to a lengthening of average debtor collection and inventory cycles across the majority of the profiled sectors, partly offset by longer average supplier payment cycles. There were however varying results across companies within sectors and three of the nine sectors analysed showed a net release in cash from working capital. The most significant improvements were achieved by management teams who implemented focused working capital improvement programs.

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