U.S. Companies Are Leaving $950 Billion in Excess Capital on Their Balance Sheets, Booz & Company Analysis Finds

Companies can free up significant amounts of cash by better managing
inventories, accounts receivables and accounts payables

Booz & Company online profiler offers a quick snapshot of corporate working
capital positions
NEW YORK--(Business Wire)--
U.S. publicly-held companies are leaving as much as $950 billion in working
capital untapped on their corporate balance sheets, according to a recent
analysis by global management consulting firm Booz & Company. Even in today`s
capital-scarce environment, many organizations have overlooked key opportunities
to free up cash that could make the difference in whether these organizations
are able to navigate today`s illiquid economy.

The finding is "particularly surprising and troubling" given the ongoing credit
crunch and increased public sector injections of liquidity into certain industry
sectors, said Barry Jaruzelski, Partner, Booz & Company. "Especially now, when
credit is not readily available, untapped working capital is a wasted asset that
can be converted to cash quickly with proper discipline."

Booz & Company based its results on findings from its Working Capital Profiler,
an online evaluation tool that analyzed the working capital positions of North
American stock exchange-listed businesses with annual revenues of more than $1
billion. This interactive tool can be found at http://workingcapital.booz.com/,
and enables corporate finance teams to grade their working capital proficiency
versus industry peers, as well as demonstrating how significantly cash can
impact performance.

The Summer 2009 issue of strategy+business magazine published "$950 Billion in
Extra Capital," an examination of the Profiler`s findings and a discussion of
best practices to effectively manage working capital.

According to the analysis, systematically aligning operations such as accounts
receivable, accounts payable and inventory can be highly effective in accessing
excess working capital. In one [typical] example, a consumer products maker
could add $670 million to its current cash position by speeding accounts
receivable days, constraining accounts payable and reducing inventory turns to
the 75th percentile of its peer group. "Companies need this cash right now,
either to keep the business alive or to invest in improving competitive
positions," said Booz & Company Partner Conrad Winkler.

The Booz & Company analysis also finds a marked difference between leading and
lagging working capital performers:

* Benchmark companies (those in the top fourth of their industry group)
demonstrated the ability to reduce working capital positions by an aggregate of
6% since July 2008, whereas the bottom fifth more often experienced increases in
the time needed to turn working capital into cash. Clearly, organizations with a
strong command of their working capital drivers are better able to make use of
their current assets and leverage cash in times of crisis.
* Companies that avoid a narrow, functional approach to address the problem are
most effective in capturing this value and converting it to cash. Instead, they
recognize the interdependencies among functions that have led to poor working
capital and use an executive team to determine the strategic approach that would
produce the greatest returns.

"Piecemeal initiatives aimed at improving working capital tend to squeeze the
balloon, adding pressure to the system rather than releasing the air by freeing
up excess cash from the system as a whole," Jaruzelski noted.

About Booz & Company

Booz & Company is a leading global management consulting firm, helping the
world`s top businesses, governments and organizations.

Our founder, Edwin Booz, defined the profession when he established the first
management consulting firm in 1914.

Today, with more than 3,300 people in 59 offices around the world, we bring
foresight and knowledge, deep functional expertise, and a practical approach to
building capabilities and delivering real impact. We work closely with our
clients to create and deliver essential advantage.

For our management magazine strategy+business visit www.strategy-business.com.

Visit www.booz.com to learn more about Booz & Company.

Booz & Company
Michael Bulger, 212-551-6274
Michael.bulger@booz.com
or
Makovsky + Company
David Rosen, 212-508-9690
drosen@makovsky.com

Copyright Business Wire 2009