Search
 

For Your Information

Working Capital Pressures Heat Up; Pension Losses Hit Profits

By Staff Writer | Updated on February 01, 2009

After months of deteriorating sales, Richmond, Va.-based Circuit City Stores Inc. pulled the plug on its 567 outlets in January as it failed to find a buyer or secure adequate working capital. A few days earlier, the 104-year-old regional department store chain Gottschalks Inc. filed for bankruptcy protection as it sought a buyer or additional capital. Other blow-ups could follow, analysts say, as retail sales remain soft and credit remains tight. Meanwhile, more businesses–even those in far healthier sectors–are bracing for possible cash flow shortages, recent surveys show. Nearly 80% of U.S. companies say economic turmoil has hurt business with 67% citing tightening cash flow as a top concern, according to the Credit Research Foundation, which represents financial and working capital executives of manufacturing and banking companies.

This finding is backed up by a KPMG LLP poll showing that slightly more than 80% of the 550 U.S. and European senior financial executives surveyed cited working capital management as their highest, or high, priority. That’s not surprising considering two-thirds reported flat or deteriorating capital, compared with three years ago and only 37% of those respondents had a working capital improvement program in place during the past five years. Of those who lacked a program, 70% predicted working capital will stay the same or decrease. “There is no doubt that companies have heightened cash management concerns today as compared to just a few months ago,” says Brad Hillier, a managing director in KPMG’s advisory services practice.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

Recommended Stories

Investments Shift away from Bank Deposits

Investments Shift away from Bank Deposits

Tom Hunt |

The 2023 AFP Liquidity Survey found that treasurers are reducing bank deposits and moving investments toward more secure vehicles, reflecting the U.S. economic climate of 2022 and the bank failures of 2023.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.