The Complete Guide to Business Analytics (Collection)

27Competitor Cash Flow Analysis

Short Description

Cash flow is often described as the "life blood" of a business. While profit is a reasonable measure of performance (due to the "matching concept" of accrual accounting), it is a very poor measure of viability. Cash flow is the prime measure of viability and also is a major determinant of operating flexibility—the ability to fund new initiatives and to defend against competitive attacks.

This chapter considers both historic and future cash flow analysis. While historic cash flow analysis adds a little to our understanding of a business, its underlying strength, and the ability of management to cope over the business cycle, it is future cash flow that is the most valid in determining viability ...