Module I· Working Capital & NWCIntermediate
Question
What are the typical NWC drivers by industry?
Answer
Mechanics
industry-specific NWC profiles (NWC / sales ratio) vary considerably by business model:
| Industry | NWC / sales | Driver | Examples |
|---|---|---|---|
| Software / SaaS | −5% to +5% | upfront subscriptions create negative WC (deferred revenue > AR) | SAP, Salesforce |
| FMCG | 10–20% | moderate inventory needs, short cash conversion | Procter & Gamble, Unilever |
| Industrials / machinery | 25–35% | high inventory needs, long DSO on large projects | Caterpillar, Siemens |
| Retail / e-commerce | −5% to +5% | customer cash immediately, suppliers paid later | Amazon |
| Pharma | 25–40% | high patented-product inventory, long payer payment cycles | Pfizer, Novartis |
| Engineering / project business | 15–35% (high volatility) | advances vs. project build-out | — |
Deep diveShow more details
Pitch tip
in cross-sector comps, show the NWC profile as a valuation driver — lower NWC means higher cash conversion, which justifies a multiple premium.