J.P. Morgan’s 2021 Working Capital Index report provides treasury and finance professionals with insights into the working capital performance of the S&P 1500 companies in the past year. We also assess the impact of the pandemic outbreak across industries and focus on how companies can better manage liquidity risks going forward.
The report captures trends from the Working Capital Index, Cash Index and Cash Conversion Cycles (CCC) of the S&P 1500 from 2011 to 2020.
CCC helps in quantifying how efficiently a company is managing its working capital. It measures the amount of time it takes to convert inventory purchases into cash flows. CCC is represented as:
The Cash Conversion Cycle (CCC) is the number of days it takes to convert inventory purchases into cash flows from sales. The CCC is a metric that helps quantify the working capital efficiency of a company and is derived from three different components:
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