Cash tied up, suppliers squeezed: report

McGrathNicol Advisory has launched its 2018 Working Capital Report, revealing working capital metrics worsened, on average, across a sample of 146 ASX-listed businesses, in nine sectors.

The report shows working capital cycles increased by an average of 0.5 days to 48.7 days in 2018, tying up an additional $691 million in working capital within the sampled companies. The net result of 0.5 days was driven by companies holding higher average inventory balances but attempting to offset that cash impact by taking slightly more time to pay suppliers where possible.

The report revealed transport & distribution companies experienced the greatest deterioration in working capital performance, with all but one of the sampled companies having lengthened working capital cycles.

While 75% of the sample reported EBITDA growth, increased levels of activity and improved trading performance didn’t translate to better working capital outcomes.

Read more…

This article was authored by Charles Pauka and was first published in Transport & Logistics News on 4 December 2018.