ShmoopTube

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finance a la shmoop. what is working capital? alright people say we're opening

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a lemonade stand. I seed what you did there. unfortunately we can't just blink [man stands in front of stage]

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our eyes like Aladdin's genie and you know make it all happen. magically we

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don't need a ton of money to start things but we need some money in advance. [genie comes out of lamp]

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of you know when we begin collecting revenues well we have to rent a location,

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and pay six months rent in advance, and we got to buy about 87 pounds of

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sugar and 4,000 lemons and hundred fourteen huge bottles of purified water,

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oh and cups we need eight thousand cups. all told it costs about 50 grand in

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capital, working capital. see we did there, we need before we can start to run the

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business, and you know pay employees and so on .so we get an investor TBOG. the [people stand in line for lemonade]

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bank of Grandma. yeah we love her. she gives us a hundred grand. well that

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entire hundred grand invested into our little business is our total working

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capital. right? fifty grand and start the business working and we got 50 left over

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or just in case things don't start up as quick as we hope .its capital that lets

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us start working. in cleverly named there. all right well 50 grand we know we're

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gonna spend 50 grand and cover the time in between when we're up and running and [calendar]

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revenues and all the other stuff start to kick in. and well yeah it's that

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simple. put together an actual drinkable lemonade recipe ?well that's just a

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little bit harder. working capital. live it love it breathe it. [ grandma grimaces]

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