January 26, 2022

SB-Accounting

Accounting + Finance Blog

Dangote Sugar Net Working Capital base on Annual Report 2020

Dangote Sugar Working Capital base on Annual Report 2020
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Dangote Sugar net working capital was positive for the 2020 annual report. Calculating the WC for this company wasn’t stressful. Why? The totals of the current assets and liabilities are known. As it is computed in the statement of financial position. Let us delve into it.

Working capital is the number of funds a company can use to meet daily operational needs. And net Working Capital is free cash flow available to pay expenses and long-term debts after clearing up all current liabilities. The net working capital formula is simply current assets less current liabilities.

Dangote Sugar Net WC Calculation

To calculate the Net Working Capital for this company, you should download the annual report for the year 2020. Then, locate the statement of financial position. There, you will see the line items for assets, equity, and liabilities. Also, if you look closely, you will find the headings for current assets and current liabilities.

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One interesting thing about the Dangote Sugar Annual report is that the total value for current assets and liabilities is known. All you need to do is subtract the current liabilities from the current assets. That’s your net working capital.

In case you wouldn’t download the annual report here, I have compiled the required assets and liabilities in the screenshot below using Microsoft Excel. Also, I have computed the values of net Working Capital for the Group and company for 2020 in comparison with 2019.

Dangote Sugar Working Capital base on Annual Report 2020

What Else You Should Know about WC

A good WC must be positive. This reflects that the company can pay off current debts and has extra cash to pay non-current debts. The cash can also be used to meet negative influences from the company’s external environment. Factors like fluctuations in foreign exchange and inflation can be handled with the additional fund.

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This is true with this company. It may source material, plants, and equipment outside the shores of Nigeria. So foreign exchange may affect their prices. More, Nigeria is facing constant inflation growth. Therefore, the extra finance can meet these risks.

As you can see from the screenshot above, the net working capital for the group is 34,249,570 and 22,728,574 for 2020 and 2019 respectively. Also, the company had 17,958,478 and 88,459,014 in their respective 2020 and 2019 financial years.

Conclusion

Dangote Sugar’s net working capital is the difference between current assets and liabilities. For the group and company, it earned a positive WC. And this extra capital can be used to meet other expenses and mitigate risks that may arise in the future.

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