{"id":102121,"date":"2022-09-19t12:00:17","date_gmt":"2022-09-19t16:00:17","guid":{"rendered":"\/\/www.g005e.com\/?p=102121"},"modified":"2024-08-07t23:10:33","modified_gmt":"2024-08-08t03:10:33","slug":"know-the-cash-flow","status":"publish","type":"post","link":"\/\/www.g005e.com\/2022\/09\/19\/know-the-cash-flow\/","title":{"rendered":"five cash reports you can’t live without"},"content":{"rendered":"

\"\"<\/a>profits don\u2019t mean a thing if they’re not represented by cash.
\n<\/strong><\/p>\n

by ed mendlowitz
\n77 ways to wow! the handbook for small-business advisory services.<\/a><\/i><\/p>\n

cash is the lifeblood of a business. cash amounts. cash flows. cash changes. no matter what anyone tells you, cash is the bottom line you must watch and accumulate.<\/p>\n

more: <\/b>the priorities were backward<\/a> | the seven-minute financial statement<\/a> | the kpi an absentee manager needs<\/a>
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simplistically, knowing your cash balance gives you a sense of how you are doing. if it goes up, you are making money \u2013 if it goes down, you are losing money.
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\nof course, not everything is that simple. there are factors such as accounts receivable and inventory that can increase and have profits absorbed there, or accounts payable can decrease, also absorbing profits, as can unfinanced equipment purchases.<\/p>\n

\u201chappiness is a positive cash flow.\u201d \u2013 frederick adler, venture capitalist<\/p><\/blockquote>\n

i have seen many extremely profitable businesses consistently plow the profits back into the company and even borrow to pay the income taxes with the owners taking next to nothing out for themselves to grow their personal net worth \u2013 and then the business hits a losing streak and doesn\u2019t have the internal or personal resources, i.e., cash to meet the challenges it is confronted with, hastening the decline.<\/p>\n

profits, in the true sense, should be measured by the increase or decline of cash balances. the owners should become sensitive to cash changes and should measure the profitability of their business by actual cash flow and not by the accountants\u2019 definition of profits.<\/p>\n

most financial statements include a statement of changes in cash balances. this is usually skipped over with the major attention being given to the balance sheet and profit and loss statement. the statement of cash flows should be reviewed carefully to see where the profits are being absorbed and what can be done to reverse downward trends in the cash balances.<\/p>\n

at the end of the day, we accumulate and spend cash and its various iterations of liquid assets. no matter how wealthy you are, happiness is created by a positive cash flow.<\/p>\n

some more information<\/strong><\/p>\n

do you understand blood? perhaps not, but you know that your body needs it, or you will die. the same with cash \u2013 your business needs cash or it will die. however, unlike blood, you need to understand the flow of cash.<\/p>\n