Cash Rules: Learn & Manage the 7 Cash-Flow Drivers for Your by Bill McGuiness

By Bill McGuiness

(Kiplinger Books) A advisor to handling money stream to make sure the expansion and prosperity of a company. Identifies seven money drivers companies have to keep watch over, maximize, and music money circulation. additionally outlines the right way to undertaking destiny money movement. DLC: funds circulation.

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Additional resources for Cash Rules: Learn & Manage the 7 Cash-Flow Drivers for Your Company's Success

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Since inventory is an asset, we must credit it to record a decrease, so we go ahead and credit inventory for $500. Credit inventory: $500 But now the debits no longer equal the credits, and that’s not OK—the system won’t be in balance until we offset the credit entry that reduced inventory by $500 with one (or more) appropriate debit(s) totaling $500. What debit could logically offset the inventory credit of $500? We know that inventory is an asset, but the actual use of inventory is an expense—and we did use some.

As a result, they can change enormously in the very short term. Generally speaking, the money supply and its velocity will have more variability for a smaller company and less variability for a larger one. General Motors’ balance-sheet figure for cash and cash equivalents, the company’s own money supply, will vary far less over the course of a year than will that of the Smith Construction Co. The reason is the law of large numbers. One consequence is that the risk of the money supply’s dipping to the danger point is much greater for small enterprises than for large ones.

And recent performance indicates that the company’s management still seems to have an inadequate understanding of cash flow. After spending a bundle to acquire Kmart of Canada, the company had little cash left for the major remodeling its aging stores required to appeal to today’s fashion consumers. These buyers are critically attuned to their total shopping environment and experience. The Bay must also deal with the cash implications of keener competition in electronics, appliances and other product lines taken over by giant, low-margin specialty retailers.

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