A key indicator of corporate efficiency may now be better than at any time since the turn of the millennium.
The net working capital cycle ― a crucial measure that tracks the time a company takes to convert current assets like inventory into sales and then collect the money from customers has seen remarkable improvement.
According to data from the Centre for Monitoring Indian Economy (CMIE), the average company needed nearly 90 days to complete this cycle in 1999-2000. Fast forward to 2023-24, based on the latest available data, that figure has nearly halved to 47.8 days.
While the 2023-24 figures are derived from a smaller sample covering 1,011 companies compared to the 3,000-odd listed firms in previous years - they still provide a strong indication of the trend. The preceding year, 202223, saw the working capital cycle shrink to 54.1 days, the lowest since 2005-06.
This story is from the September 04, 2024 edition of Business Standard.
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This story is from the September 04, 2024 edition of Business Standard.
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