PwC: Companies Need to Improve Working Capital Performance in the Middle East

PwC: Companies Need to Improve Working Capital Performance in the Middle East

PwC in its latest Middle East Working Capital Study finds that average working capital efficiency in the Middle East deteriorated slightly between the end of 2018 and 2019 to 127.6 days, the lowest performance in the past five years.

 

Net Working Capital (NWC) days deteriorated between 2015 and 2019 by a compound rate of 2.7%, corresponding to around $9.94 billion (AED36.5 billion) of additional cash tied up in operations by listed companies across the region.

 

In the first half of 2020 the average working capital performance deteriorated further during Covid-19 lockdowns to 156.7 days, as weaker credit policy controls slowed the rate of collections and shifting demand patterns coupled with rigid supply chain processes led to inventory buildup. This increase in working capital days was a key early indication of reduced liquidity