Lessons from the 1980s: Working Capital, Part 2

By Tim Brannon Best Practices We painted a pretty depressing picture in the last column (“Lessons from the 1980s: Working Capital, Part 1.”)  So how DID dealers survive the 1980s? They spun that working capital like crazy. Working capital (WC), as everyone knows, is defined as current assets minus current liabilities. Sales divided by WC is “working capital turn.” Modern economists state a high working capital turn means greater profit. The reality of the 80s was if one had a WC turn of over 6 in the farm equipment business, the bills could not be paid due to the high capital requirements. (Our WC turn approached the speed limit.) READ FULL ARTICLE>>