Ireland has come first in an 18- country analysis of the use of working capital by Europe's top 1,000 companies.

However, the annual exercise by REL Consultancy Group found that there was still €3.6 billion unnecessarily tied up in excess working capital in the Irish companies examined - the equivalent of wasting more than €199 million in profit, according to the consultancy.

The consultancy estimates that improvements in cash collections and shorter customer payments, new inventory and supply chain management initiatives, and the extension of payment terms to suppliers would typically raise net profits by up to 19 per cent a year, reduce net debt by 44 per cent, and improve typical return on capital by 15 per cent.

The consultancy said that Ireland still had a lot of scope for focusing on working capital as a method of freeing up money for future investment and growth.