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The Language of Cash Flow

When your business was just starting out, you may have received only an income statement from your accountant. The question you wanted answered was whether the company was profitable. Then your accountant told you that you needed a balance sheet to help you understand your company’s assets and liabilities. That was fine. But ultimately, to see the full picture of your business, you also need a cash flow statement.

You’d think a cash flow statement would be easy to read. Since cash is real money, there are no assumptions and estimates incorporated in the numbers. Cash coming in is a positive number, cash going out is a negative one, and net cash is simply the sum of the two. In fact, though, we find that nearly every ...

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