Example
1:
Assuming a Weighted Average Cost of Capital ratio
of 8% p.a. the above mentioned numbers result is
DSO: 34'800.-
DIO: 6'666.67
DPO:-12'000.-
This equals total costs of 29'466.67. Depending on
further frame conditions, these costs have a direct and heavy impact on the
liquidity, i.e. cash.
The parameter to optimize working capital are
Accounts Receivable, Accounts Payable and Inventory. Whereas especially
inventory is quite complex, but has often the highest potential for improvements.
To achieve the maximum of success it is mandatory
to optimize in a strategic way. That means, not easy writing to customers
and suppliers and beg them for appreciation. Much better is it to improve from
inside to outside and from small to large. Only this way let you have success.
Are you interested how much
money you could and should unfreeze from your working capital and
important, what your todays costs are because of not-optimised structures?
Click here and you see an Excel form in which you can calculate these
numbers (anonymiously).
Example 2:
Due to the
isolation of free liquidity on the one hand and level of debt with short-term
money on the other hand important key-figures are monitored worser than they
could be with an optimised working capital.
A) Group Balance before
improvment
B) Group Balance after
improvement
The situation
shows on consolidated level at year end a balance like A) above. The gearing
is 77,3%.
In balance B)
the liquidity of companies A, B and C are netted with the short-term debt of
companies D and E. Thus
, the gearing is
improving to 72,5%. Although
not more liquid funds are available. This is an
easy to achieve but very important change if you consider that capital giving institutions and partners are looking
intensive to
this important key-figure.
Expample 3:
The Working
Capital is a clear indicator for upcoming critical situations. If
the net-working capital is more rising than the turnover a liquidity crisis
could
arise
in about 3 years. The key-figure for this measurement is Working
Capital / Balance Total.
Example
4:
