Supply Chain Management

Supply Chain Management
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Supply Chain Management
​ The days of working capital (DWC) refer to the period it takes a company to convert its capital into revenue. If a company cannot convert its working capital into revenue in the shortest time possible, it becomes challenging to meet its financial obligations. This paper will focus on the days of working capital of Ford Motor company.
DWC = Average working capital× 365/sales revenue​
= 3,346,000,000 x 365/ 35,683,000,000
= 34 days
The days of working capital for Ford Motor Company is 34 days. The company’s ratio is lower than that of its competitors. This means that Ford Motor Company is more efficient in its operations than its competitors. The ratio shows that the company is making more sales than its competitors because it has a large market share. Its competitors have less efficient processes, which explains why they take longer to convert their working capital into revenue.
Comparing the day of working capital ratio to that of the industry is essential because it helps determine its performance. The ideal ratio should be equal to or lower than the industry’s ratio. If the company’s ratio is lower than the industry’s ratio, it means that the company’s performance is better than what is expected of companies in the industry. Such a company has minimal to no chances of failure and has a large market share. The large market share contributes to the high number of sales, thus lowering the company’s days of working capital ratio. If the company’s ratio is equal to the average industry ratio, it means that the company is performing well but needs to improve its processes (Sensini & Vazquez, 2021). Such a ratio means that a slight compromise on the...