Working capital cycle for a trade, Financial Econometrics

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Working capital cycle for a trade

Inventories days (time inventories are

held before being sold)

Trade receivables days (how long the

credit customers take to pay)

Trade payables days (how long the

company takes to pay its suppliers)

Working capital cycle (in days)

(Inventories/ cost of sales)x 365 days

(Trade receivables / credit sales) x 365 days

(Trade payables / purchases)x 365 days

Working capital cycle (in days)

Please note that for "trade payable days" calculation, if information about credit purchases isn't known then cost of sales is used instead.

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