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Measuring Working Capital is Key to Optimisation

  • Our finance costs and working capital are driven by the cycle times of our operations processes. The longer a process takes – the more it costs
  • We therefore have to measure the time a process takes in relation to a number of factors
    • How long did it take (Actuals)
    • How long should it have taken (Best possibles)
    • How long did it take in the past (Seasonal impacts and trends over time)
    • How long do others take (Benchmarking to Sectors)
  • The most common way to look at working capital measurement is in days
  • DSO Days of Sales Outstanding
  • DPO Days of Payables Outstanding
  • DIO Days of Inventory Outstanding