Talk:Billy Elliot and Working capital: Difference between pages
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[[Image:2005private_sector_credit.PNG|thumb|right|Domestic credit to private sector in 2005]] |
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{{FilmsWikiProject|class=Start|importance=|nested=yes}} |
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'''Working capital''', also known as '''net working capital''', is a financial metric which represents [[Accounting liquidity|operating liquidity]] available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as [[current assets]] minus [[current liabilities]]. If current assets are less than current liabilities, an entity has a '''working capital deficiency''', also called a '''working capital deficit'''. |
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{{WikiProject Dance|Ballet=yes|class=Start|importance=mid|Ballet-importance=mid|nested=yes}} |
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A company can be endowed with [[assets]] and [[profit]]ability but short of [[liquidity]] if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash. |
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==Musical== |
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Isn't it about time that someone made an article for the musical? I'd do it, but, despite having seen it, I don't know enough and the website's not the most helpful. Cheers! <small>—This [[Wikipedia:Sign your posts on talk pages|unsigned]] comment was added by [[User:Willnz0|Willnz0]] ([[User talk:Willnz0|talk]] • [[Special:Contributions/Willnz0|contribs]]) {{{2|}}}.</small><!-- [Template:Unsigned] --> |
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:I do believe there is a seperate article for that, which can be found [http://en.wikipedia.org/wiki/Billy_Elliot_the_Musical here] --JJMan 20:35, 10 October 2006 (UTC) |
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==Calculation== |
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Ragner |
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'''Current assets and current liabilities''' include '''three accounts''' which are of special importance. These accounts represent the areas of the business where managers have the most direct impact: |
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*[[accounts receivable]] (current asset) |
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*[[inventory]] (current assets), and |
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*[[accounts payable]] (current liability) |
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The current portion of [[debt]] (payable within 12 months) is critical, because it represents a short-term claim to current assets and is often secured by long term assets. Common types of short-term debt are bank loans and lines of credit. |
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==Infobox== |
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The infobox was missing alot and had some errors, I fixed it all and did a little cleanup on the page. I made a plot section and will do a little more work to raise the page's rating. If you think I messed up or want some help, please write here or better, leave me a message [[User:Caf3623|Caf3623]] 04:59, 31 July 2006 (UTC) |
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An increase in working capital indicates that the business has either increased [[current assets]] (that is received cash, or other current assets) or has decreased [[current liabilities]], '''for example''' has paid off some short-term creditors. |
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==Nominations & Awards/Class== |
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OK. I just added ALL of the nominations and awards that the film recieved from 2000-2001. ''It took forever.'' Also, I have looked over this article and really think that it can be upgraded to B-Class, so I changed the assesment on it to B. [[User:Caf3623|Caf3623]] 06:18, 31 July 2006 (UTC) |
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::The article should be Start-class, no offense to you on all your hard work but check out [[Wikipedia:WikiProject_Films/Style_guidelines]] for information that all articles need to even be considered for a higher class, B-class is very close to being complete. [[User:Cbrown1023|Cbrown1023]] 19:59, 13 September 2006 (UTC) |
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'''Implications on [[M&A]]:''' The common commercial definition of working capital for the purpose of a working capital adjustment in an M&A transaction (ie for a working capital adjustment mechanism in a sale and purchase agreement) is equal to: |
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== plot == |
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''Current Assets - Current Liabilities excluding deferred tax assets/liabilities, excess cash, surplus assets and/or deposit balances.'' |
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Where did the information for the first part of the paragraph come from? I don't recall it being in the movie at all but maybe I'm wrong? --[[User:Breezy hwesta|Breezy hwesta]] 09:22, 23 December 2006 (UTC) |
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Cash balance items often attract a one-for-one purchase price adjustment. |
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==Accurate?== |
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thanks. |
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It is stated that Billy has to miss ballet due to the strike. I remember in the film however, Billy's dad finding him doing ballet and banning him from doing it any more. Billy agrees and tries to keep his promise to begin with, but partly due to his mother's letter and partly due to his friend, and also due to his instructor, he goes to the audition in London and is accepted for ballet school. <small>—Preceding [[Wikipedia:Signatures|unsigned]] comment added by [[Special:Contributions/217.42.152.148|217.42.152.148]] ([[User talk:217.42.152.148|talk]]) 17:40, 6 September 2007 (UTC)</small><!-- Template:UnsignedIP --> <!--Autosigned by SineBot--> |
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==Working capital management==<!-- This section is linked from [[List of finance topics]] --> |
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==Adam Cooper?== |
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Decisions relating to [[working capital]] and short term financing are referred to as ''working capital management''. These involve managing the relationship between a firm's [[Asset#Current assets|short-term assets]] and its [[Current liability|short-term liabilities]]. The goal of Working capital management is to ensure that the firm is able to continue its [[Operations management|operations]] and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. |
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I suppose that the Adam Cooper in the link in the cast is not the correct one. {{unsigned|84.100.79.152|22:29, 17 December 2007}} |
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===Decision criteria=== |
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==''[[The Stars Look Down (film)|The Stars Look Down]]''== |
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By definition, working capital management entails short term decisions - generally, relating to the next one year period - which are "reversible". These decisions are therefore not taken on the same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based on cash flows and / or profitability. |
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The sentence about this 1939 film (based on the novel of the same title by [[A.J. Cronin]]) being an inspiration for ''Billy Elliot'' should be included in this article, because it is factually correct. Also, it was never deleted before, Mr. Cooper (only the wording was altered to make it more speculative) - you took this upon yourself, so you're wrong there too. In its present form - "may have been" - it is already a tangential statement. I read an interview (I am looking for the url) wherein Lee Hall explicitly said that this film left an impression on him for various reasons (for one, it is partially set in Newcastle, his place of birth). The powerful sense of solidarity and socialist principles bodied forth in ''The Stars Look Down'' really resonated with him. He also spoke of how the film, directed by [[Carol Reed]], was so visually memorable, even saying that certain shots from ''The Stars Look Down'' were deliberately echoed in ''Billy Elliot'', such as the interminable rows of miners' houses in the pit village and the children playing in the mud outside the houses (Hall had a girl always standing in the alley near Billy's home). There are undeniable correlations between the two works (aside from the larger theme of striking miners and a son trying to escape from a life in mining...) - one being that Davey's (played by Michael Redgrave) younger brother, Hughie, chases his dream of a life outside of the pit via football - and he carries his cleats around with him everywhere ([http://www.youtube.com/watch?v=NMrKa_KEWRM YouTube]), not unlike Billy and his ballet shoes. In the film version of another Cronin novel, ''[[The Citadel (film)|The Citadel]]'', the protagonist offhandedly says, "What are you supposed to go down a mine in - dancing pumps?" ([http://www.youtube.com/watch?v=rzkYdTCADec YouTube]) - the list of similarities goes on... Writers often influence other writers - see Bloom's ''[[The Anxiety of Influence]]'' for further discussion - they often do not own up to this, but Hall clearly has done so in this case. In the ''Scotsman'' interview, Hall plainly states that he hopes to remake ''The Stars Look Down'', and there is footage of the film shown during the opening number of ''Billy Elliot the Musical'' (which just happens to be titled "The Stars Look Down"!). Furthermore, the [http://www.lyricsondemand.com/soundtracks/b/billyelliotthemusicallyrics/thestarslookdownlyrics.ht opening song's lyrics] are strikingly close to the text ("We'll stand as one, beneath the sun" - obviously a dramatic counterpoint to "the stars look down") of Cronin's novel (also depicted in the film - [http://www.youtube.com/watch?v=aX9KBRfCny8 YouTube]), when Davey argues at a debate for the nationalization of mines: "I do not necessarily believe that everything under the sun should be publicly owned... I might, of course, say that coal mining is not something under the sun." Denying that there is any connection between these two works when there is abundant evidence to the contrary is downright ridiculous. I suggest that you first see ''The Stars Look Down'' (or even better, read the novel) before haphazardly deleting information that is entirely valid - this is an act of ignorance on your part and quite UNencyclopedic. [[User:Purpleroyale|Purpleroyale]] ([[User talk:Purpleroyale|talk]]) 03:00, 10 October 2008 (UTC) |
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*One measure of cash flow is provided by the [[cash conversion cycle]] - the net number of days from the outlay of cash for [[Material|raw material]] to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count. |
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*In this context, the most useful measure of profitability is [[Return on capital]] (ROC). The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; [[Return on equity]] (ROE) shows this result for the firm's shareholders. Firm value is enhanced when, and if, the return on capital, which results from working capital management, exceeds the [[cost of capital]], which results from capital investment decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making. See [[Economic value added]] (EVA). |
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===Management of working capital=== |
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Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the [[Asset#Current assets|''current assets'']] (generally [[cash]] and [[cash and cash equivalents|cash equivalents]], [[Inventory|inventories]] and [[debtor]]s) and the short term financing, such that cash flows and returns are acceptable. |
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*'''[[Cash management]]'''. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs. |
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*'''Inventory management'''. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials - and minimizes reordering costs - and hence increases cash flow; see [[Supply chain management]]; [[Just In Time (business)|Just In Time]] (JIT); [[Economic order quantity]] (EOQ); [[Economic production quantity]] (EPQ). |
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*'''Debtors management'''. Identify the appropriate [[Credit (finance)|credit policy]], i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or ''[[vice versa]]''); see [[Discounts and allowances]]. |
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*'''Short term financing'''. Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank [[loan]] (or overdraft), or to "convert debtors to cash" through "[[Factoring (trade)|factoring]]". |
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==See also== |
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*[[Cash conversion cycle]] |
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*[[Corporate_finance#Working_capital_management|Working capital management]] |
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*[[Sustainable growth rate]] |
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[[Category:Financial accounting]] |
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[[de:Betriebskapital]] |
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[[es:Fondo de maniobra]] |
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[[fr:Fonds de roulement]] |
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[[it:Capitale circolante netto]] |
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[[he:הון חוזר]] |
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[[nl:Werkkapitaal]] |
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[[ja:運転資本]] |
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[[ru:Оборотные средства]] |
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[[sv:Rörelsekapital]] |
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[[uk:Оборотний капітал]] |
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[[zh:營運資金]] |
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Revision as of 03:11, 10 October 2008
Working capital, also known as net working capital, is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.
Calculation
Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:
- accounts receivable (current asset)
- inventory (current assets), and
- accounts payable (current liability)
The current portion of debt (payable within 12 months) is critical, because it represents a short-term claim to current assets and is often secured by long term assets. Common types of short-term debt are bank loans and lines of credit.
An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors.
Implications on M&A: The common commercial definition of working capital for the purpose of a working capital adjustment in an M&A transaction (ie for a working capital adjustment mechanism in a sale and purchase agreement) is equal to:
Current Assets - Current Liabilities excluding deferred tax assets/liabilities, excess cash, surplus assets and/or deposit balances.
Cash balance items often attract a one-for-one purchase price adjustment.
thanks.
Working capital management
Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of Working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.
Decision criteria
By definition, working capital management entails short term decisions - generally, relating to the next one year period - which are "reversible". These decisions are therefore not taken on the same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based on cash flows and / or profitability.
- One measure of cash flow is provided by the cash conversion cycle - the net number of days from the outlay of cash for raw material to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count.
- In this context, the most useful measure of profitability is Return on capital (ROC). The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; Return on equity (ROE) shows this result for the firm's shareholders. Firm value is enhanced when, and if, the return on capital, which results from working capital management, exceeds the cost of capital, which results from capital investment decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making. See Economic value added (EVA).
Management of working capital
Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, such that cash flows and returns are acceptable.
- Cash management. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.
- Inventory management. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials - and minimizes reordering costs - and hence increases cash flow; see Supply chain management; Just In Time (JIT); Economic order quantity (EOQ); Economic production quantity (EPQ).
- Debtors management. Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and allowances.
- Short term financing. Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring".