Cash’s effect on the balance sheet.
Here is a chart on how cash is affected by changes to the balance sheet.
A detail that is commonly overlooked on financial statement analysis, is that A/R growth is a use of cash. Consecutive periods of A/R Growth, is an indicator that a company is becoming insolvent. In the UCA Cash Flow, these changes are reflected in net cash after operations (ncao) and are not available for debt service. A sign of further insolvency is a company has several layers of debt, with escalating balances outstanding and interest rates.
To mitigate this situation, growth must be limited.
ma.gnolia: CNN
Posted on August 16th, 2007 | By: David Litsky | Filed under Banking
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