Definition
The turnover indicator for measuring the efficiency of operating capital use is one of the core value drivers of Danaher.
In detail
Working Capital Turns (WCT) is a financial metric measuring the efficiency of a company's working capital use: WCT = = annual sales revenue ÷ (accounts receivable + inventory − accounts payable), without averaging; the monthly QWCT uses this month's month-end working capital × 4 annualized, drawing data from last month's + this month's + next month's forecast revenue. It is one of Danaher's Core Value Drivers (CVD) and, together with QDSO, QIT, QDPO, and others, forms a comprehensive measure of working capital efficiency. Unlike pure profit margin metrics, WCT focuses on capital occupation efficiency and is directly linked to cash flow and return on investment. Typical outputs are monthly or quarterly WCT values and their trends, used by management to assess capital efficiency and drive improvement actions.
Example in practice
A manufacturing company finds WCT declining for two consecutive quarters. In the monthly CVD review, management analyzes and finds that increased accounts receivable days (QDSO) is the main cause. They form a cross-functional team, use TPI to improve invoicing and collection processes, and negotiate payment terms with sales. Three months later, QDSO drops, WCT recovers, and the metric is added to the annual strategy deployment tracking list.