Working Capital Productivity measures your Sales / Revenue to Working Capital.  

It is used to measure whether a business has invested enough in Working Capital to support its Sales.  

The higher the ratio the more Sales have been generated by the available Working Capital.  

To calculate: Total Annual Revenue / Total Working Capital

Low levels of Total Working Capital are preferable to high, if the overall performance of the business is not compromised.

Methods of increasing your Working Capital Productivity Ratio include:
1.    Tightening your credit terms with your clients /customers
2.    Requesting greater credit terms from your suppliers
3.    Carrying less stock / inventory
4.    Improving the number of sales
5.    Improving the level of sales
6.    Holding stock for less periods of time
7.    Reduce Work In Progress (WIP) by invoicing clients / customers on a more regular basis.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com