The survey analyses the accounts of the 947 largest EU companies this year. Key findings include:
- If EU companies optimised working capital performance they could gain €1.1 trillion.
- Companies in Europe have more cash on hand than ever before: cash is up 6% from 2013 and 62% over the last seven years
- The Cash Conversion Cycle (CCC), which represents the time each euro is tied up in the buying, production and sales process before being converted back to cash, improved by 5.5% in 2014. In the US, by contrast, the CCC remained flat. EU Corporations are becoming more adept than their American counterparts at working capital management.
- Much of the cash, however, comes from debt. Corporate debt has soared to €3 trillion: corporate borrowing is up 40% on 2007. Borrowing increased by 5% in 2014 alone. This surge in debt is a result of years of low interest rates.
- Cheap debt provides a short term fix for corporations but is holding back important long-term efforts to improve cash flow. The research shows that the more reliant on debt a company is, the less impressive its cash flow performance.
