CHAPTER 5

Your Cash Flow Statement Is Speaking

Can You Hear It?

Just as a speedometer doesn’t tell you everything you need to know about the condition of your car, the Net Income Statement doesn’t give you the full picture of the condition of a business. Did you know a business can be showing a profit and still be going bankrupt? It’s true. If you doubt me, just ask the character George Bailey in the Frank Capra movie It’s a Wonderful Life.

Every Christmas, the networks dust off this classic and it never gets old. George Bailey, played by Jimmy Stewart, is manager of the Bailey Building and Loan. On Christmas Eve, he is devastated to discover that his Uncle Billy has lost an $8,000 cash deposit on his way to the bank. This was the entire cash ...

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