...The 1,000 largest U.S. public companies reduced the number of days it took to convert working capital into cash received from customers to 35.7 days in 2016 from 37.1 a year earlier. European firms took 40.4 days, up from 39 days in 2015.
Conagra Brands Inc. cut its cash conversion cycle by roughly 12 days during its 2017 fiscal year, resulting in a $263 million reduction in working capital. It improved expenditure usage in inventory, accounts receivable and accounts payable, said CFO David Marberger.
The focus on more efficient use of working capital follows a prolonged period of near-zero interest rates around the world. Credit is becoming more expensive as the Federal Reserve has started inching up interest rates in the U.S., and there are expectations of a less accommodative monetary policy from the European Central Bank. Hackett found that companies that cut their cash-conversion cycle by seven days added between 1.05% and 2.1% to their earnings margin.
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