Working Capital Report 2024
Additional $754 million in cash “locked up”
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McGrathNicol Advisory profiled 124 ASX-listed companies across seven sectors, with a combined market capitalisation of $1.15 trillion. We have analysed the most recent full year (FY) results for 2024 and 2023 and incorporated international benchmarks for Asia, the US, and the EU.
The length of the average working capital cycle increased in 2024, tying up an additional $754 million in cash for our sampled companies as working capital became more difficult to manage. There was a mix of results at the company level with 46% of the businesses actually experiencing a decrease in Days Working Capital, highlighting that a material competitive advantage can be achieved by implementing best practice working capital management techniques.
On average companies took longer to collect from customers and held more inventory than in 2023. They sought to mitigate those factors by taking longer to pay their suppliers which is not a sustainable long-term management strategy.
Key findings explained by Partners Jason Ireland and Sean Wiles
Working capital performance is a primary indicator of an organisation's health, providing insight into the way management teams operate and the strength of their relationships with customers, suppliers and other key stakeholders. The capacity to turn sales into cash faster reduces the cost of running a business and provides a material competitive advantage.
Industries
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Working Capital Report authors
Report Summary & Findings