Behind the Rankings
The management of working capital combines two measures, weighted equally:
1. Days of Working Capital (DWC) = (Receivables + Inventory Payables) ÷ (Sales ÷ 365 Days). If payables exceed the sum of receivables and inventory, DWC is negative.
2. Cash Conversion Efficiency (CCE) = Cash Flow from Operations ÷ Sales.
The overall ranking: (Highest Overall CCE Company CCE) ÷ (Highest Overall CCE Lowest Overall CCE) + (Lowest Overall DWC Company DWC) ÷ (Lowest Overall DWC Highest Overall DWC). Days of Sales Outstanding (DSO), Inventory Turns, and Days of Payables Outstanding (DPO) are not part of the overall ranking criteria. Industry averages consider all companies in an industry, not just the top five.
Sources: REL Consultancy Group, Piranha Web
Back to “Forget the Float? — The 2001 Working Capital Survey”
| TOBACCO | ||||||||||||
| Overall Rank | Company Name | Prior Year Sales | Cash Conver. Effic. | Days Working Cap. | Days Sales Outst. | Inven. Turns | Days Payable Outst. | |||||
| CCE | Rk. | DWC | Rk. | DSO | Rk. | Ts. | Rk. | DPO | Rk. | |||
| 54 | UST INC | $1,548 | 33% | 22 | 79 | 710 | 17 | 142 | 1 | 998 | 37 | 277 |
| 276 | PHILIP MORRIS COS | $80,356 | 13% | 256 | 48 | 437 | 22 | 172 | 3 | 854 | 16 | 878 |
| 318 | R J REYNOLDS TOBACCO HOLD. INC | $8,167 | 8% | 498 | 30 | 253 | 4 | 42 | 5 | 659 | 4 | 996 |
| 703 | UNIVERSAL CORP | $3,402 | 6% | 675 | 71 | 634 | 34 | 304 | 5 | 612 | 23 | 657 |
| 975 | STANDARD COMM. CORP | $1,106 | 1% | 908 | 137 | 945 | 71 | 815 | 3 | 855 | 43 | 201 |
| 465 | Industry Average | $18,916 | 12% | 73 | 30 | 3 | 25 | |||||
Back to the 2001 Working Capital Survey
