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Governance May 3, 2026 1 min read

That "market problem" on your P&L is a working capital problem in disguise

CA Priyank Vaidya
CA Priyank Vaidya
Partner, DRP & Co. LLP

That "market problem" on your P&L? It's actually a working capital problem wearing a costume.

Boards love to blame the market.

“Demand was soft.”

“Customers delayed orders.”

“Competition was aggressive on pricing.”

But strip the story back, and the chain often looks like this:

  1. Finance delays the supplier advance (cash tight).
  2. Procurement delays raw material (no advance).
  3. Production misses the schedule (no material).
  4. Marketing loses the order (no stock).
  5. The Board records “soft market” in the minutes.

The market didn’t fail you. Your cash conversion cycle did.

In manufacturing, Days Inventory plus Days Receivable minus Days Payable is not a finance metric. It is the single most important governance metric a board can monitor.

Because by the time it shows up in revenue, it is already 90 days too late to fix.

Boards, when did you last review your cash conversion cycle, line by line?

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Disclaimer: This article is prepared for general information purposes and should not be construed as professional advice. Views expressed are those of the author. Readers are advised to consult a qualified professional before acting on anything in this article. DRP & Co. LLP does not accept any liability for actions taken based on this article.