• Vision and strategy
• Market
• Operations
• Financial development
  • P/WC
• Sustainable development
• Competence and responsibility
• History

The Group’s profitability model – P/WC

B&B TOOLS has an internal profitability target for the Group as a whole and all of its profit units. The measure that is used is called P/WC, which refers to operating profit in relation to utilised working capital for the profit unit being measured. The Group’s goal is for P/WC to amount to at least 45 percent per year for the Group as a whole and for each individual operating area. In other words, the working capital that is utilised for each individual operating area should generate a return of at least 45 percent annually. The working capital that is required for the Group’s various units is simplified into inventories plus accounts receivable less accounts payable.
Every Group company develops its own activity plans and priorities based on its performance in relation to a P/WC of at least 45 percent.
 

Using P/WC as a model offers numerous advantages:
• P/WC can be broken into two key ratios that are easy to work with:
P/WC= Operating margin (ROS) x Working capital turnover rate.
• These two ratios can be used to compare any units within the Group.
• It is easy to delegate responsibility for ROS and turnover rate to involve inventories, accounts receivable and accounts payable.
• P/WC makes it possible to focus on one thing at a time, while still striving to achieve the goal.
• Products has an average P/WC of approximately 70 percent. This is the result of several years of goal-oriented work.
• Markets is in the middle of an extensive project focusing on ROS. The project began in the summer of 2007 and has already generated positive results. Once ROS has achieved a satisfactory level, focus will shift to working capital.