J.P. Morgan launches working capital index
02 July 2019 Singapore
Image: Shutterstock
J.P. Morgan has launched the J.P. Morgan Working Capital Index to allow firms to grade and analyse their working capital within the industry.
The index assesses the companies listed on the S&P Composite 1500 index, which collectively hold around $460 billion in liquidity across supply chains.
This capital can be released through firms’ working capital optimisation programmes, which have been effectively implemented in the utilities, consumer staples and logistics industries in particular between 2011 and 2018.
J.P. Morgan also identified the sectors that have struggled to formulate effective working capital optimisation programmes, such as aerospace, defence, semiconductors and media.
Gourang Shah, head of treasury services, Asia Pacific, J.P. Morgan, commented: “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.”
He continued: “We developed the index to help our clients identify inefficient use of liquidity within their organisations and explore opportunities to improve their internal sources of funding.”
Sridhar Kanthadai, head of wholesale payments, Asia Pacific, J.P. Morgan, added: “In conversations with our clients, it is clear that CFOs and treasurers are increasingly committed to improving internal sources of liquidity, given the rapidly evolving environment in which they operate.”
He said: “The J.P. Morgan Working Capital Index is designed to provide a credible benchmark for them to set specific and quantitative goals in their working capital strategy and execute accordingly.”
The index assesses the companies listed on the S&P Composite 1500 index, which collectively hold around $460 billion in liquidity across supply chains.
This capital can be released through firms’ working capital optimisation programmes, which have been effectively implemented in the utilities, consumer staples and logistics industries in particular between 2011 and 2018.
J.P. Morgan also identified the sectors that have struggled to formulate effective working capital optimisation programmes, such as aerospace, defence, semiconductors and media.
Gourang Shah, head of treasury services, Asia Pacific, J.P. Morgan, commented: “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.”
He continued: “We developed the index to help our clients identify inefficient use of liquidity within their organisations and explore opportunities to improve their internal sources of funding.”
Sridhar Kanthadai, head of wholesale payments, Asia Pacific, J.P. Morgan, added: “In conversations with our clients, it is clear that CFOs and treasurers are increasingly committed to improving internal sources of liquidity, given the rapidly evolving environment in which they operate.”
He said: “The J.P. Morgan Working Capital Index is designed to provide a credible benchmark for them to set specific and quantitative goals in their working capital strategy and execute accordingly.”
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