Join Jim Stice for an in-depth discussion in this video Company D: Cash cow, part of Running a Profitable Business: Understanding Cash Flow.
- Okay, we are looking at cash flow…data for four companies,…and using those cash flow data…determining to which one of the companies…we should give a loan.…We looked at company A and decided probably not.…Company A has negative operating cash flow…and usually negative free cash flow.…We also looked at Company B…and also turned away in disgust.…Company B is liquidating, collecting cash…from selling off its land, buildings…and equipment without replacing them.…We looked at Company C and discovered…a normal company with positive…cash from operating activities,…but that positive operating cash is not enough…to pay for Company C investing activities.…
We are still thinking about Company C,…and whether to company will be able…to increase its operating cash flow…in the future enough to repay our loan.…But while we're doing that, let's look…at the cash flow statement for Company D.…What's the most important number…in this statement of cash flows?…Answer, It's the operating cash flow.…That's always the first number we look at,…
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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