New Capital Survey Findings Measure Impact of Covid-19

The Hackett Group has just completed its working capital research update for Q2.

This is the first time researchers have done a mid-year update, and it has unearthed some very interesting findings relating to how the pandemic has impacted on performance, including payments to suppliers and inventory.

Among the key points researchers found were these:

*A 14% decline in revenue from Q2 2019, and decreases in gross margin, EBIT margin, and net income margin. Debt levels increased sharply by 13% and cash on hand increased by 47%.

*Overall Working Capital - Cash Conversion Cycle (CCC), which includes payables, receivables, and inventory, declined by 13%, (40.7 days versus 36 days in Q2 2019).

*Payables – Most companies are paying suppliers more slower than ever, and Days Payable Outstanding (DPO) has hit a 10-year high, declining by 10% (60 days versus 54.7 days).

*Receivables – Companies are collecting from customers more slowly, with Days Sales Outstanding (DSo) increasing by 7% longer (47.3 days versus 44.3 days).

*Inventory – Companies are holding more inventory, with quarterly Days Inventory Onhand (DIO) increasing by 15% ( 53.3 days versus 46.4)

“Some industries clearly did much better than others, as you would expect,” said researchers. “We looked at 20+ industries, and provide some level of data and analysis on each.”

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