E&Y: $1trillion still tied up in working capital
Liquidity crisis across US and Europe despite stronger focus on cash
Companies across the US and Europe have $1 trillion locked up in working
capital which could be used to bolster liquidity.
The rate of improvements made to working capital performance had slowed from
63 per cent of companies in the US and 50 per cent of companies in Europe to 43
per cent of both regions, E&Y’s report – ‘All tied up’ discovered.
Inventory levels increased in the US by 10 per cent and Europe, up four per
cent in the final quarter of 2008, the study found.
The amount tied up in these businesses represents 6 per cent of sales. For
every US$1 billion in sales, firms could decrease their working capital balance
by an average of US$60 million.