​Organizations must increasingly focus on cash flow management as well as working capital optimization as liquidity pressures increase due to increased economic volatility and higher credit costs, according to the latest edition of the PwC Working Capital Study.

An analysis of the financial statements of 18,000 of the largest companies worldwide shows some stability in overall working capital indicators and a continued recovery from levels reached during the pandemic, when both working capital and supply chains were slow to respond to external shocks. However, current economic and geopolitical challenges will negatively impact net working capital figures.

Although the working capital ratios presented in the latest annual financial statements of companies show signs of recovery, when analyzed in depth, there are still worrying trends and unexplored opportunities for improving capital efficiency. In addition, it is very likely that companies currently have a surplus of €1.49 trillion in working capital on their balance sheets, money that could be used for other, more productive purposes.

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Article supported by PwC Romania