From startups to legacy brands, you're making your mark. We're here to help.
Key Links
Prepare for future growth with customized loan services, succession planning and capital for business equipment.
Key Links
Institutional Investing
Serving the world's largest corporate clients and institutional investors, we support the entire investment cycle with market-leading research, analytics, execution and investor services.
Key Links
Providing investment banking solutions, including mergers and acquisitions, capital raising and risk management, for a broad range of corporations, institutions and governments.
Key Links
A uniquely elevated private banking experience shaped around you.
Whether you want to invest on your own or work with an advisor to design a personalized investment strategy, we have opportunities for every investor.
Explore a variety of insights.
Key Links
Insights by Topic
Explore a variety of insights organized by different topics.
Key Links
Insights by Type
Explore a variety of insights organized by different types of content and media.
Key Links
We aim to be the most respected financial services firm in the world, serving corporations and individuals in more than 100 countries.
Key Links
By Varoon Mandhana
Senior Advisor, Treasury Solutions, Apac
By Vikrant Verma
Advisor, Wholesale Payments Solutions, Asia Pacific J.P. Morgan
By Varoon Mandhana , Vikrant Verma
In this report, we examine how Japanese listed firms have fared in their working capital management over the years and how enhancing treasury management can improve both the profitability and balance sheet efficiency to help them generate more value for their shareholders.
The report examines the return on capital employed (ROCE) performances over the past five years, and captures trends from the Working Capital Index, Cash Index and Cash Conversion Cycles (CCC) of the Nikkei 225 companies compared to their S&P 1500 counterparts from 2011 to 2020.
Return On Capital Employed (ROCE) measures a company’s ability to generate profits on the capital deployed in the business and it has two major components: operating income and capital employed. ROCE is calculated as follows:
ROCE = EBIT(1-tax) / (Average total debt of last two calendar years + Average book value of equity of last two calendar years)
Cash Conversion Cycle (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:
$139B Estimated working capital that can be released across Nikkei 225 companies
ROCE 2020 Performance 3.9% Average Nikkei 225 company 7.2% Average S&P 1500 company
CCC 2020 Performance 104 days Average Nikkei 225 company 77 days Average S&P 1500 company
Days sales outstanding (DSO) 2020 Performance 77 days Average Nikkei 225 company 54 days Average S&P 1500 company
Days payable outstanding (DPO) 2020 Performance 68 days Average Nikkei 225 company 52 days Average S&P 1500 company
Days inventory outstanding (DIO) 2020 Performance 95 days Average Nikkei 225 company 75 days Average S&P 1500 company
Improvements to cash and working capital levels can significantly boost the ROCE of Nikkei 225 companies by 0.8 percent.
Treasury can help improve ROCE for Japanese companies by focusing on three key pillars:
To learn more about benchmarking and optimizing global working capital, please contact your J.P. Morgan representative.
Investments or strategies discussed herein may not be suitable for all investors. Neither J.P. Morgan nor any of its directors, officers, employees or agents shall incur in any responsibility or liability whatsoever to the Company or any other party with respect to the contents of any matters referred herein, or discussed as a result of, this material. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice or investment recommendations. Please consult your own tax, legal, accounting or investment advisor concerning such matters.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of J.P. Morgan, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed to be reliable. Neither the author nor J.P. Morgan makes any representations or warranties as to the information’s accuracy or completeness. The information contained herein has been provided solely for informational purposes and does not constitute an offer, solicitation, advice or recommendation, to make any investment decisions or purchase any financial instruments, and may not be construed as such.
JPMorgan Chase Bank, N.A. Member FDIC.
JPMorgan Chase Bank, N.A., organized under the laws of U.S.A. with limited liability.
Payments
Enhancing capital efficiency and fuelling long-term growth with working capital optimization
Dec 01, 2023
Through insights derived from the analysis of working capital metrics, this report aims to help treasury and finance professionals for Japanese companies track working capital trends and guide their initiatives to optimize working capital management for recovery and growth.
Payments
Supporting future strategies: Working capital index Latin America 2023
Nov 30, 2023
Through insights derived from the analysis of working capital metrics, this report aims to help treasury and finance professionals for Latin American companies track working capital trends and guide their initiatives to optimize working capital management for recovery and growth.
Payments
Data helps ease the pain of cross-border payments for Financial Institutions (FIs)
Nov 30, 2023
There are several challenges involved in cross-border payments, but the data that is associated with each transaction can help alleviate those obstacles for financial institutions.
Payments
Payments do more than you think for insurers
Nov 28, 2023
Delivering efficient, dependable solutions at scale with the security you’d expect from a trusted payments innovator.
Payments
How AI will make payments more efficient and reduce fraud
Nov 20, 2023
Artificial intelligence (AI) is expanding the payment capabilities of non-bank financial institutions, according to a panel at this year’s J.P. Morgan NBFI Leaders Forum in Sydney.
Payments
Enhance your social commerce strategy with payments innovation
Nov 07, 2023
Social commerce has become an integral strategy supporting all business globally across industries.
Payments
Driving advanced cross-currency payments for financial institutions
Nov 06, 2023
See how this one innovative global solution can help you rethink the way you do cross-border business.
Payments
Helping pay for the cost of college
Oct 31, 2023
How friends and family can contribute funds towards a child’s future education expenses, using debit cards to gift to a 529 account
You're now leaving J.P. Morgan
J.P. Morgan’s website and/or mobile terms, privacy and security policies don’t apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan isn’t responsible for (and doesn’t provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan name.