Capital Structure Of Oil And Gas Industries


3)Working Capital
: Working Capital is considering what the best way would be in terms of a management for short-term resources and obligations. The concept of this decision focuses on if it is possible to maintain enough capital for payments of its bills including and extra money earned as interest. Current assets and current liabilities are considered as the part of this decision.

In the daily operations of the skilled nursing center where I work, there are two kinds of capital, fixed capital and working capital. Fixed capital consists of the building, grounds and equipment and working capital is what is necessary to manage the day to day activities of the center. When I add together the totals for current assets and current liabilities in the balance sheet, a very important figure can be calculated, working capital. Effective management of working capital is essential to my center’s fundamental financial health and operational success. An indication that a facility is in the hands of a strong administrator; is one who has the ability to utilize working capital management to sustain a solid balance between

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

Capital structure long term is looking at how assets for the business should be paid for. Through the article the common theme is to more efficiently change working capital into cash that can be used to pay for the debt and liabilities for the business. By converting the working capital into cash, the business can make payments without having to take out an extra loan or take on more debt for the business. The working capital management is evaluating the day-to-day finances of the firm and how to make sure it is paid for. Again converting working capital into tangible resources that can be used to pay for the firm is key to covering the businesses operating expenses day to day in this economy. It is more profitable for the company to do this. This will not change the overall total value of assets, but it would shift assets from being fixed into being current. Having more current assets creates a larger net working capital for the business, which is beneficial to them. Determinants of the businesses growth include total asset turnover and the dividend policy. The total asset turnover will be increased if the tips in this article are complied with. This is because having current assets that can and will be used increases this amount. The dividend policy is about choosing how much to pay shareholders versus reinvesting

George 's Train Shop is a family owned business that focuses on the sales and repairs of train toys. George is running a profitable business, but as he is aware of my MBA Managerial Finance class, he has asked for advice on his working capital practices. Although George is currently enjoying the benefits of a profitable business, there are opportunities for him to expand his business ventures. This first starts by dissecting degree of aggressiveness in working capital practices, current capital budgeting practices, and areas where he can improve in both arenas. In addition, careful management of the company 's cash flow will

Capital budgeting is a long-term schedule that decides what investment projects to choose. When an option is selected, a company decides where and how to obtain the funds to support its investment and a way of determining the capital structure. A company should make sure it has access to working capital to maintain it operations daily. If this is not available, the company will not be able to maintain it daily operation until

Similarly, the working capital ratio is a metric that is utilized for the purpose of appraising the liquidity position of a commercial entity (Robinson). A review of the working capital of the two companies confirms that they had a positive working capital in 2014, but a negative one in 2015 (Yahoo.com). The outcome suggests that the liquidity position of the organization has deteriorated. Thus, the two commercial entities are likely to experience challenges with respect to meeting short-term obligations.

As we have learned in previous modules, cash is one of the most important assets for any business because it easily can be converted or exchanged to any other type of asset or service. So, when cash is not managed correctly, it can generate serious problem and unbalances to the company that could lead to bankruptcy if they are not detected and fixed on time. So, one effective way to managed cash appropriately is by keeping track of how cash is being used and the cash flow will provide details of the business financial activities.

What is working capital? Working capital is defined as the difference between current assets and liabilities. Current assets are assets that are expected to be turned into cash in within a year. Current liabilities are obligations that are due within one year. Working capital measures the amount leftover when you take the liabilities out of the assets, this number can be positive or negative.

This assignment consists of a profitable business ran by a man name “George.” George is aware that we are in a MBA Managerial Finance class and he needs advice on his working capital practices. George would like the answers to the following:

One of the most fundamental business strategies used to increase your Net Working Capital is simply to sell your products for more then you paid for it. Or sell your services for more than the cost to provide them.

Cash management includes understanding your business 's "operating cycle" (i.e. cash to cash cycle). To improve your "operating cycle" it is imperative you understand what it means, how to calculate it, and what influences it before you can improve it. Cash expectations your cash balance to be in 6 months?" Most of the time companies are fighting cash flow problems today and can 't think about the future past this week. Forecasting and managing cash flow provide a real sense of control over the business. Implement a Cashboard-Dashboard, 13 week cash flow forecast and review cash flow reports at least monthly. The key for any business is to focus on cash, not just EBITDA and Net Income, as Cash is King!

Many organizations have maximized the use of cash on hand by effective cash management techniques and the use of short-term financing. This paper will discuss various cash management techniques and short-term financing methods used by organizations.

Poor cash management is the most frequent stumbling block that causes business failure (Anon., 2013). Good cash management comes from knowing when, where, and how cash needs will occur. Knowing the best sources for cash is vital to being prepared to meet needs as they arise. This requires good relationships with bankers and creditors. Developing and maintaining cash flow projections helps to understand how cash is generated and used in a business. Without understanding the cash flow of a business, the business is doomed for failure.

Working capital is the life blood and operational hub of a business . only a dissemination of a blood is vital in the human body for looking after life, working capital is exceptionally crucial to keep up the smooth running of a business. No business can run effectively without a satisfactory measure of working capital. The fundamental points of interest of keeping up satisfactory measure of working capital are as per the following: