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Cash, the Bottom Line

There are chapters on the cash flow statement in every course I am teaching this semester.  And yep, there is nothing more important than cash, just ask Ford or GM that are losing money and burning through their cash hoard.  Will they downsize in time to avoid running out of money?  Gee, Ford dropped its dividend altogether last week.  The dot.coms had a burn rate, the total money the raised divided by their loss per month projected how long they would be in business, and sure enough most are gone now.

Take a read on how new software is helping entrepreneurs better manage cash.

DLE

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2 responses to “Cash, the Bottom Line”

  1. Pam Joyce Avatar
    Pam Joyce

    The one thing that the author said that caught my eye was in the second to last paragraph where he advised the small business owner to keep his household financially sound. I think this is most important for the business also. How many business owners pay themselves an exorbitant salary ( all of the net income) only to eventually lose the business? How can a business grow if the cash is not reinvested in newer more improved assets(which doesn’t include the BMW)? The successful business owner is the one that works hard, stays late, and pays the company first.

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  2. Dennis Elam Avatar
    Dennis Elam

    Good points all Pam, In my CPA practice, I quickly learned that the owner who understand cash as a business asset is usually a success. The owner that thinks it is just to spend on toys ususally does not make it. Indeed one of the signs of the impending top at Enron, as Houston Chronicle Mimi Swartz observed, was the number of exotic sports cars in the company garage. In fact, the last assignment that Ms. Fastow had at Enron was art collector. She had formerly been the tax preparer…..

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