This is Part 2 of a Series. Go to Part 1: By Sheer Business Instinct, We Know that Cash is King
The Income Statement is a handy-dandy financial statement readily available and can be used easily to evaluate a firm's profitability. It cleanly breaks down the revenues, direct expenses, gross profit, operating expenses, and net income. However, it falls short of presenting the whole picture in terms of a firm's liquidity. Liquidity is a financial concept that measures and captures a company’s ability to collect cash revenues and pay off cash expenses.
Take note that as I carry along, I’d be assuming a manufacturing or a retailing business (these are simpler and more familiar to many of us). This is critical to note because the nature of cash flow can greatly vary from industry to industry (banks and finance-related businesses, for example, are rather more complex, and not as straight-forward). Further, while we shall discuss its different features, keep in mind that you want to be centrally focused on internally-generated cash. Cash flow can be confusing because of its diverse nature (e.g. there may be cash coming in but not by virtue of business operations such as externally sourced capital). Again, as a businessman investor, what you seek and mindful of are cash generated internally by the business. Continue to Part 3: Showing You the Money and Natures of Cash Flow
Cosa significa investire in borsa e perché “giocare”?
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Giocareinborsa è un’attività che può dare un alto rendimento. Ma cosa
significa investire in borsa? In che modo si può giovare? Il mercato
azionario è uno...
4 years ago
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