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Principles of Finance Videos 156 videos

Principles of Finance: Unit 1, Alex, That’s Finance Potpourri for $500
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Okay, so you want to be a company financial manager. It's basically up to you to make money for the shareholders. It would also be swell if you mad...

Principles of Finance: Unit 1, Company Formation, Structure, Inception
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How is a company... born? Can it be performed via C-section? Is there a midwife present? Do its parents get in a fight over what to name it? In thi...

Principles of Finance: Unit 1, Income Statements: Margin, Operating Profits, and More
47 Views

What is an income statement, and why do we need it in our lives? Well, let's take a look at an income statement for Year 1 of the Sauce Company, an...

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Principles of Finance: Unit 3, Hollywood Accounting 18 Views


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Description:

How is accounting done in La La Land (the place, not the movie)? Eh, not entirely ethically, as it turns out. In fact, it would make for a great Liam Neeson flick.

Language:
English Language

Transcript

00:00

principles of finance a la shmoop- Hollywood accounting. ever read missives

00:08

about the Hollywood accounting? well the vibe is undoubtedly bad. like who thinks [accounting explained on a whiteboard]

00:13

a Hollywood accountant is generally like good anyway? other than the power player

00:18

who hired her of course outright lying about expenses is too easy a method of

00:22

cheating. instead in bad accounting costs get overstated a producer has to rent a

00:28

ranch to shoot a horse chasing an alien scene. it's lo alien. but that ranch just

00:35

happens to belong to the producer. is it accounting leak kosher to have the

00:40

producer actually rented from herself? well technically it is in fact kosher

00:45

but the optics are bad too much room for corruption to take place, and you know

00:50

the producer really wanted that West field plowed for personal reasons ,but

00:54

maybe you suggested that the film needed the West field plowed right? so the movie [black and white of horse pulling a plough]

00:59

pays for that plowing and/or the house and or anything else. that fair not fair?

01:03

well not fair. optics matter. when you're the financial manager that cliche holds.

01:08

you build a reputation over decades and you can destroy it in five minutes .and

01:12

yes your personal life enters into your professional life these days whether or

01:15

not you think that's fair. even in Hollywood. but here's a hard thing to

01:19

think about only one in 20 movies make a profit. like a real profit .so that one

01:24

movie has to pay for the losses of the other 19. well when you've greenlit a

01:29

slate of 20 movies which will rent a soundstage for two years for two million

01:34

dollars how do you account for the cost of that two million dollars? well if you

01:38

allocate by revenues then you'd quote burden unquote the big hit monster movie

01:44

starring Brad Pitt aful which was 90% of the revenues of the 20 movies and with [revenues listed]

01:49

90% of the cost. the whole slate of movies generated a billion dollars of

01:54

revenues and while shmoop wars with Brad pitiful was 900 million of that. the

01:59

other 19 movies totaled only a hundred million of revenues. you know in the one

02:03

starring Amanda Bynes that only was 14 bucks. even though she mop wars took only

02:07

one twentieth of the time of the rental of that soundstage is it fair to burden

02:13

it 90% of the costs? hmm so is it fair well

02:17

we're thinking. and then how do the profit participants feel about that

02:21

allocation ?meaning that Justin Boober or Brad pitiful stars of the movie, [profit participant defined]

02:26

well Brad anyway was to keep 10% of the profits of the film the film was clearly

02:32

very profitable. have you charged one twentieth of the two million dollars for

02:37

that soundstage rental well then it's rental expense in the film would have

02:40

been a hundred grand but instead you charged one point eight million in

02:45

studio costs so you just essentially well you took away one point seven

02:49

million dollars in profits from Brad pitiful profit pool and that would have

02:54

netted him a hundred and seventy grand Brad's agent will be none too happy

02:58

about this arrangement. legal yes. fair? well maybe why maybe well because when [equations]

03:03

the movie was funded nobody knew it would be a big hit had the movie done

03:07

horribly would the studio have asked Brad pitiful for his salary back? no the

03:12

studio will argue that it's totally fair because this big hit movie just made

03:17

Brad pitiful even more valuable and on his next contract he can secure even

03:23

better terms. and in fact in real Hollywood definitions of profit are a

03:27

big part of the contract negotiations for big stars accountants as deal [people frown sitting at a table discussing terms]

03:32

quarterbacks. yeah who knew?

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