Any way you look at it, 2009 was one of the worst years ever for corporate working capital performance. Certainly, last year was the worst that CFO has reported since it started tracking working capital trends more than a decade ago.
For instance, average days working capital for 1,000 of the biggest U.S. public companies jumped by 8.2%, according to the CFO/REL Working Capital Scorecard. That increase marks the biggest DWC deterioration in the last five years for that universe of large companies.
Among the elements that comprise working capital, days sales outstanding performance fell by 10.4%. Although the DSO deterioration was balanced almost evenly by an 11.4% jump in days payable outstanding, days inventory outstanding burgeoned by 8.8%. The reason for the inventory glut? A combination of companies replenishing their inventories after 2008 and those still stuck with unsellable product in 2009.
The question for the balance of 2010 is whether U.S. companies can turn that pain to gain. With efficiencies developed during the economic downturn, indications are that companies should be able to record better results for this year.
To read the complete results of the scorecard, see the box in the bottom right-hand corner of this page.
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