What Is The Working Capital? – You Will See, Finance Is Easy! – Episode 1, Season 1

you is she why do we see I would see thousands Israeli he say you receive you will see you see faces it's so easy yes mister my grandfather used to correct butterflies – did you return my transfer thank you have a nice day bye Roger I had a call from a mr. Rodriguez ha picking Rodriguez he said he has a problem with the working capital of his family but what is the working capital rowdy interworking typical German the mocking capital the working capital is money that you put into your operating cycle mother basically inverter razor + accounts receivable am I not a constable okay I am going to synergize then pension for you you will see it's easy dan is selling rubber ducks since he does not have a lot of cash he works in just in time and did not build an inventory hey man look I do for you good morning I would like to buy rabid dog one rubber duck let me just make one call then mr.

Sale because of his lack of inventory what about building an inventory ban then decides to order 10 rubber ducks but he has to pay the money upfront to his supplier hey Dad here's your order 10 ducks at 10 euros apiece there will be 100 euros please for you to do it okay thanks in order to have his business running then had to invest 100 euros in his working capital but as a consequence he's in the red in his bank account by 100 euros morning what can I do for you man good morning I would like a rubber duck one rubber duck coming right up I'll be 15 euros please thank you please as customers pay the working capital decreases but it will take a few sales before then returns positive on his bank account when then we'll have sold all the ducks his working capital will be back to zero but the bank account reaches 50 euros why that's because of the margin of five euros per duck but that is not our point for today before selling the ducks then cannot afford to be negative on his bank account by 100 euros how can he solve the problem one way to manage this working capital is to ask the supplier for a delay in payment hey Dad 10 ducks at 10 euros apiece there will be 100 euros please great thank you but can I pay you later please mmm okay as the seller does not pay upfront the working capital is zero after this operation continue please continue please dan is not reoccupied anymore with this cash situation he can concentrate on telling his famous rubber ducks and when the supplier comes to ask for his do dan has cash to handle the payment hey Dan it's time to pay it's hundred euro please okay sure there you go thank you for your patience okay thank you now that Dan negotiated the delay of payment with the supplier he has no need for cash to finance his inventories of rubber ducks he can now afford to face some customer delays morning hi um I would like to buy ten rubber ducks ten rubber ducks great that'll be 150 euros Oh can I pay you later hmm yeah yeah okay great great there you go thank you I will come back for sure after the sales on credit Dan's working capital is now 50 euros representing the money he expects from his customer net of what he owes to a supplier it is not cash he spent but cash he is expecting in the bank account of Dan is still zero hey Dan it's time to pay a 100 euros please okay there you go okay thanks let us recap at this point then is still a working capital of 150 euros due to the cash he is expecting from his customers the working capital has to be financed it's okay if you might if you have understood by the way I must repay you for the so DJ can I pay you next month oh yeah no column you will see why do you see why you will see thousands is rainy you say you receive you will see you can see is it's so easy you

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