How would you explain this company\'s Working Capital Management? ASSETS Cash Re

Question

How would you explain this company's Working Capital Management?

ASSETS Cash Receivables, net Inventories, net Prepayments and other current assets $443.7$577.7 1,665.0 723.6 168.9 3,135.2 1,689.3 641.2 137.4 2,911.6 Total current assets Property, plant and equipment, net Investments and other long-term receivables Goodwill Other intangible assets, net Other non-current assets 2,448.1 460.9 1,757.7 543.8 480.0 $8,834.7 $ 8,825.7 2,501.8 502.2 1,702.2 463.5 753.4 otal assets LIABILITIES AND EQUITY Notes payable and other short-term debt Accounts payable and accrued expenses Income taxes payable $175.9 $ 441.4 1,866.4 49.4 2,357.2 1,847.3 68.6 2,091.8 Total current liabilities

Explanation / Answer

Working capital ratio need to be compared with the industry standard to draw meaningful conclusions.

On standalone basis, working capital ratio of the company looks good. It shows that company will be able to pay it's current liabilities with current assets. A ratio of 1.39 for the current year shows that company is efficiently managing its working capital.

Working capital formula= Curent Assets/ Current liabilities Current Year Last Year Working capital ratio                  1.39           1.33

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