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Transaction Definition, Transaction Profitability Summary

 Strategy 1: Working Capital Funded by the Business

The following analysis represents the IRR of doing "Business as Usual" and represents a base for comparison purposes. Please note this strategy is portrayed by the following two tables. The first table describes the business transaction, and the second table summarizes the net internal rate of return for the strategy. These same tables are used for following strategies so the strategies may be compared with one another.

The Business Transaction Definition table describes the transaction in tabular form for the strategy where the accounts receivable for the business can be either 15, 30, 45, or 60 days. (Note the 45 day accounts receivable is in bold print to represents an average business accounts receivable.)

Business Transaction Definition

The table below summarizes the investment in working capital and sales revenue streams, along with the timing, for this strategy.

Working Capital Funded by the Business					15 Day A/R	30 Day A/R	45 Day A/R	60 Day A/R
Production Costs (Paid 15 Days before Invoicing) (COGS)					-60%	-60%	-60%	-60%
Wait Time before Invoicing Customer (Days)					15 Days	15 Days	15 Days	15 Days
Business Delivers Goods and Invoices Customer (Days)					0 Days	0 Days	0 Days	0 Days
Wait Time before Customer Pays (Days)					15 Days	30 Days	45 Days	60 Days
Customer Payment					100%	100%	100%	100%
Gross Profit					40%	40%	40%	40%

Business Transaction Profitability Summary

The new working capital requirement represents the base value by which all following strategies are compared. The new return on capital ratio and the internal rate of return values represents the profitability of this business transaction. The ratio and the IRR percentage can be used to compare this strategy with other strategies

Working Capital Funded by the Business					15 Day A/R	30 Day A/R	45 Day A/R	60 Day A/R
New Working Capital Requirement					-60%	-60%	-60%	-60%
New Return on Capital Ratio (Return / Investment)					1.67	1.67	1.67	1.67
Net IRR Value of Business Transaction					626.83%	416.70%	312.08%	249.45%

Strategy Summarization

The chart and table below provides a statistical and graphic representation that assists in interpretation of the relative value of a business employing this strategy, Working Capital Funded by the Business.

Strategy 1
Working Capital Funded by the Business

3W Internet Corporation commits its resources to support every alternative financial specialty that is described in this primer. Although all the computations featured in this document have been thoroughly checked and tested, there may be some functions that rely upon other financial concepts methods, strategies and ideas using software, and protocols not developed by 3W Internet Corporation. 

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