Join Jim Stice for an in-depth discussion in this video Cash flow problems kill companies, part of Running a Profitable Business: Understanding Cash Flow.
- We told you the story of the cash flow problems…of Home Depot in 1985.…We hinted at the following uncomfortable truth:…Cash flow problems can kill companies,…even when those companies have…a profitable business model.…Now how do cash flow problems arise,…and how can they kill a company?…To address these two questions,…let's assume that we are starting a building supply business…similar to Home Depot,…but we will sell to contractors and home builders…not to general retail customers.…And we'll focus on opening just one store.…
As we think through this process of opening our one store,…let's focus on cash.…In particular, notice how long we have to spend cash…until we finally start to collect cash.…So step one, coming up with a business idea.…The good news here is that often this step doesn't require…spending any cash.…We think, we talk with friends,…we look around at existing businesses.…Of course we can hire some business advisors…to help us in this idea generation process,…but for this example let's assume that all of this work…
Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
- Differentiating between net income and operating cash flow
- Categorizing cash flow
- Using financial data to deduce cash flow
- Managing operating, investing, and financing cash flows
- Typical cash flow patterns
- Converting net income into operating cash flow
- Improving operating cash flow
Skill Level Intermediate
1. The Importance of Cash Flow Analysis
2. Overview of the Statement of Cash Flows
3. Using Cash Flow Data to Make a Loan Decision
4. Converting Income Statement Data into Operating Cash Flow Data
5. Managing Cash Flow
6. Cash Flow Numbers for Some Real Companies
The danger of free cash flow3m 56s
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