Question

Select a company of your choice and research the working capital of that company (i.e. GE Capital, Wal-Mart, Apple, Google, Yahoo, IBM, Boeing, Target ...etc) and explain their working capital strategy based on your findings.

Answer 1

Here we study the working capital strategy of Apple by calculating the cash conversion cycle.
As we see from chart below, the company has a negative cash conversion cycle and thus it is able to realise collections from the market faster than it has to pay its suppliers. Thus it is extremely efficient in its working capital management strategy.

Also its current assets is most comprised of cash as evident from below, so its working capital requirement adjusted for cash is minimal

Current Assets
Cash And Cash Equivalents	25,913,000	20,289,000	20,484,000	21,120,000
Short Term Investments	40,388,000	53,892,000	46,671,000	20,481,000
Net Receivables	48,995,000	35,673,000	29,299,000	30,343,000
Inventory	3,956,000	4,855,000	2,132,000	2,349,000
Other Current Assets	12,087,000	13,936,000	8,283,000	14,691,000
Total Current Assets	131,339,000	128,645,000	106,869,000	89,378,000

The company has negative working capital requirement after current assets are adjusted for cash

Total Current Assets adj for cash	105,426,000	108,356,000	86,385,000	68,258,000
Total Current Liabilities	116,866,000	100,814,000	79,006,000	80,610,000
Working Capital adjusted for cash	-11,440,000	7,542,000	7,379,000	-12,352,000