Introduction to Supply Chain Planning
A business can be profitable—with a strong return on investments—yet still might not consistently generate cash. It is cash—not earnings—that reduces debt, and a business without sufficient cash will ultimately go bankrupt. Management’s principal focus should be on growing a business’s profits and cash flow as a primary driver for creating shareholder value, as seen in the chart (Figure 2.1).
Figure 2.1 Shareholder value added
Freed-up cash can be used for the following:
•Increasing growth opportunities
•Expansions into adjacent and other industries ...