Strategy

2001 Working Capital Survey – Chart 5

CONGLOMERATES
CFO StaffJuly 1, 2001

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.

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Sources: REL Consultancy Group, Piranha Web


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CONGLOMERATES
Over- all 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.
2 BERK- SHIRE HATHAWAY INC $24,028 12% 290 (273) 1 127 986 13 248 418 2
171 GENERAL ELECTRIC CO $129,853 20% 105 60 537 175 993 10 309 138 6
891 ALLE- GHENY TECH. INC $2,460 8% 501 124 923 61 691 3 851 29 474
355 Industry Average $52,114 13%   -29   121   9   195  

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