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Financial Intelligence, Revised Edition
book

Financial Intelligence, Revised Edition

by Karen Berman, Joe Knight, John Case
January 2013
Beginner content levelBeginner
272 pages
6h 32m
English
Harvard Business Review Press
Audiobook available
Content preview from Financial Intelligence, Revised Edition

19

Why Cash Matters

Of course, by now you may be saying to yourself, “So what? All this is cumbersome to figure out, and why do I care?”

For starters, let’s see what our sample company’s cash flow statement reveals. In terms of operations, it is certainly doing a good job of generating cash. Operating cash flow is considerably higher than net income. Inventory declined, so it’s reasonable to suppose that the company is tightening up its operations. All of this makes for a stronger cash position.

We can also see, however, that there is not a lot of new investment going on. Depreciation outweighed new investment, which makes us wonder if management believes that the company has much of a future. Meanwhile, the company is paying its shareholders ...

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Publisher Resources

ISBN: 9781422144121