Off the Shelf: The 2004 Working Capital Survey

Low inventories drove down working capital last year. But will that continue as the economy improves?

The 2004 survey once again shows DWC declining in 59 percent of U.S. sectors. This time, however, European performance is on par — 60 percent of sectors reduced DWC. Moreover, the United States and Europe show similar levels of improvement in receivables, inventory, and overall working capital performance. “Clearly, on both sides of the Atlantic there is now a common awareness of working capital best practices,” says Loneux. “It’s part of globalization.”

Ironically, globalization may also account for a slight deterioration in results for Dell, long the leader in working capital management. The company saw DSO rise 20 percent, to 32 days. “As we continue our growth outside the U.S., certain countries aren’t as robust” when it comes to payment and other practices that affect working capital, notes chief accounting officer Robert W. Davis. —T.R.

COMPANY DSO DIO DPO DWC
2003 Change
’03 – ’02
2003 Change
’03 – ’02
2003 Change
’03 – ’02
2003 Change
’03 – ’02
United States
Total 52.1 -2.6% 31.2 -2.5% 29.6 -0.3% 53.7 -3.9%
Total Excluding
Auto Mfring.
41.6 -3.0% 31.5 -3.1% 28.6 -1.7% 44.5 -3.9%
Europe
Total 59.9 -0.5% 35.0 -2.8% 41.8 1.0% 53.1 -3.1%
Total Excluding
Auto Mfring.
51.1 -1.9% 34.1 -3.4% 41.4 0.7% 43.7 -5.8%

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