Comments on: The Working Capital Loan: Secured and Unsecured Forms Expounded

By: Luckystar65

Luckystar65 — Sat, 27 Feb 2010 16:42:59 +0000

bankruptcy or now a bail out is an option

By: Ronald R

Ronald R — Sat, 27 Feb 2010 07:28:46 +0000

Working capital is defined as current assets minus current liabilities. Cash is part of current assets. Current assets are those assets that are expected to be liquidated within a year. So if working capital is increased, more current assets, including more cash, than current current liabilities, the company becomes for liquid.

Return on invested capital is more complicated and there are several ways to calculate it. One way is Net Operating Profit after Taxes divided by Total Assets – Cash – Current Liabilities. Or return on invested capital = net operating profit after taxes divided by working capital minus fixed assets. So an increase in working capital, and therefore liquidity, could decrease ROIC.

By: Bridgette

Bridgette — Fri, 26 Feb 2010 21:37:26 +0000

Let's assume it reduces inventory levels by 25 000 each year. Changes in net working capital should be included in cash flow projections so if this is plugged into ur calc, then ur npv should decrease by 74,361.78

By: Matt

Matt — Fri, 26 Feb 2010 14:51:32 +0000

Capital can come from individuals or firms specializing in venture capital funding. In either case you will be required to demonstrate that your business can become profitable (return on investment) in the foreseeable future. If you can answer the following questions with a yes, you will not have difficulty raising funds.

1) Is your customer base expanding?
2) Is your competition decreasing?
3) Is your reputation for quality and service better than that of your local competitors?
4) Are your operating costs under control?
5)You have not been in business long enough to have audtable records. How will you prove your revenue flow and costs.

GOOD LUCK

By: Nirvana

Nirvana — Fri, 26 Feb 2010 09:17:45 +0000

DR Cash and Cash from bank finance , will be Working Capital
CR Owner equity and A/P to bank finance
will be your liability

By: psychic

psychic — Fri, 26 Feb 2010 08:02:31 +0000

it’s great and easy lerning.. thanks for uploading!

By: K

Thu, 25 Feb 2010 23:45:06 +0000

Calculate the working capital for the historical periods – then that will tell you the average and peak working capital requirements for the business

By: MR. X

MR. X — Thu, 25 Feb 2010 12:29:30 +0000

You can calculate the first year working capital by using some balance sheet numbers. Net WC = current assets – current liabilities, so if you are looking at it in a finance perspective for a DCF,
Net WC = accts rec + inventories – accts payable

Once you have this number you can use the estimated WC for the next projected years in your DCF to find the change in WC.

By: Dani

Dani — Thu, 25 Feb 2010 07:39:49 +0000

Working Capital is the main resource of a trading or manufacturing business. Actually working capital is the sole earner part in a business financially. Other parts of earning such as interest on security, statutory deposits,investment etc. form a very low percentage in the total earning of a business. Huge working capital means larger inventory, more percentage of capacity utilization, and better cost management towards lowering sale-price and thereby attract more numbers of satisfied customers.Working capital in sufficiency, put into multiple numbers of cycles in a financial year betters turnovers and thereby increase in working profit; translated into more real profit for a business concern. It is the working capital which contributes in a company's books to augment capital each year and betterment of balance sheet.

By: guzen

guzen — Thu, 25 Feb 2010 07:34:25 +0000

GREAT VIDEO VERY INFORMATIVE