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Numbers that Matter by Evan Bulmer

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CHAPTER 4

Sustainable Cash Flow

What to Measure So You Don’t Grow Yourself Bankrupt

If Revenue Is Vanity and Profit Is Sanity then Cash Flow Is Reality

The most important aspect of any business is that of cash flow and now that we have an understanding of the profit and loss and the balance sheet we now have the financial data required to determine the business’ cash flow.

This can be represented by the following diagram.

image

Figure 4.1 Statement of cash flow

The statement of cash flow, like the profit and loss, is reported over a given period of time.

So it can tell us where money came from and where it was used in the business over a month, quarter, ...

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