ocr: Summary We can summarise the preceding calculations in the tollowing table: Scenario 1 Scenario 2 Scenario 3 Raw materials 4.56 9.13 2.28 Work in progress 7.30 14.60 3.65 Finished goods 2.74 5.48 1.37 Debtors 11.36 22.71 5.68 Creditors 4.11 8.21 2.05 Working capital cycle 21.85 43.70 10.92 ROCE 68.03% 57.69% 74.72% You should notice that under scenario 3, where the management operate with the highest degree of working capital etticiency, the result is a superior return on capital employed. Operating protit under all three scenarios is identical but scenario 3 proves superior because the same r ...
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