J.P. Morgan launches Working Capital Index

By capturing and consolidating the working capital metrics from the companies listed on the S&P Composite 1500 index, it provides firms with valuable insights into the working capital performance of some the world’s largest and most influential companies. In addition to the launch of the new index, J.P. Morgan also published a report on working capital trends from 2011 to 2018.

Industry benchmarking is typically the first step for many companies looking to optimise their working capital, but there are limited tools available to do this effectively, primarily because of the lack of access to reliable industry data. The bank developed the Index to help its clients identify inefficient use of liquidity within their organisations and explore opportunities to improve their internal sources of funding.

The analysis of the Index found liquidity trapped within the supply chains of the S&P 1500 companies, with the potential to release an estimated USD 460 billion through working capital optimisation programs. The industries that have shown the most improvement in optimizing working capital between 2011 and 2018 are utilities, consumer staples and logistics. Sectors that have been challenged over the same period include aerospace and defense, semiconductors and media, according to the report.