Working Capital in Global Manufacturing

Pressure on the production line

Looking across all industries, manufacturing is a sector where the link between working capital, returns and investment is particularly strong.
In light of our findings, better management of working capital represents a key lever that manufacturing companies can use to improve returns and free up cash for investment.
 
 
Companies are making blind bets on innovation with billions of dollars potentially on the line. That is one of the main findings of PwC’s Innovation Benchmark, the report surveyed over 1,200 global executives and business leaders to examine how top companies are meeting innovation challenges. 
Companies are making blind bets on innovation with billions of dollars potentially on the line. That is one of the main findings of PwC’s Innovation Benchmark, the report surveyed over 1,200 global executives and business leaders to examine how top companies are meeting innovation challenges. 
Companies are making blind bets on innovation with billions of dollars potentially on the line. That is one of the main findings of PwC’s Innovation Benchmark, the report surveyed over 1,200 global executives and business leaders to examine how top companies are meeting innovation challenges. 


Key findings

ROCE


 

We’ve seen a reduction in the Return on Capital Employed (ROCE) of global listed companies. Whilst profitability is at a 5 year high, leverage has dramatically increased, which has led to the aforementioned pressure on returns. Improving working capital management (WCM) can be the key to reducing debt burdens and improving returns.

CAPEX

 



In the same 5 years, CAPEX (as a % of revenues) has plummeted, as companies appear to be managing operating cash flows by cutting investment. In the long run, this will leave companies under-invested, which poses a threat to their growth. By optimising working capital global companies can release the necessary cash to fund investment while at the same time managing operating cash flows.

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