Select a company of your choice, and calculate the most current days of working capital (DWC) that are available.
1. How does this company’s ratio compare to those of its competitors?
2. Why is comparing this ratio to the industry average important?
3. Explain how a well-managed supply chain can come into play here.
Here are the definitions of the terms used in the formula:
Accounts Receivable: The amount of money owed to the company by its customers for goods or servi
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Net Credit Sales: The total amount of sales made on credit after deducting sales returns, discounts, and allowances
Inventory: The cost of goods held by the company for sale
Accounts Payable: The amount of money owed by the company to its suppliers for goods or services received on credit
Cost of Goods Sold: The total cost of the goods sold by the company
You can obtain the necessary financial information from the company’s financial statements, which are usually available on their website or from financial databases such as Bloomberg, Yahoo Finance, or Google Finance.