Elements to Increase Your Company Value: Strategically Part V

Productivity Pyramid: Goals – Coaching- Accountability – Rewards

The Cash Flow Report - Revisited

This blog is a continuation of the series on How to increase your business value with financial concepts:

• Financially – Part V

Today’s blog will present the additional financial metrics different from the traditional bank financial ratios and metrics.

Cash Flow

Monthly financial statements without a cash flow statement are not as effective.? The standard cash flow statement will show the increases and decreases in cash of key metrics but only on a monthly snapshot basis.? It is very difficult to determine where cash comes and goes in the company from the monthly cash flow statement.? It does not show trends or cycles.? In fact, the figure on the next page represents how a typical executive feels about cash flow.

Cash Flow: If there is a negative cash flow, you feel sad and wonder where it went. If you have positive cash flow then you smile but a monthly view is not very effective.

If you graph cash flow and all of its elements, such as, A/P, A/R, Inventory, capital expense, bank accounts, etc. for the last two years, it becomes much easier to project 12 months in to the future and see trends that may have happened in the cash flow area.

A graphical representation of cash flow is one of the most important tools for an executive and should be included on a situation dashboard

A spreadsheet should also be used to translate the accounting cash flow statement into a rolling 12-month history and a 12-month future cash flow measurement tool.

Cash flow rolling historical and future projections can be critically important tools for growth, seasonal, or shrinking companies.

Many companies have died in their growth because they did not track cash flow or the needed cash flow resources.

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I spoke to an Emerging Leaders Vistage group in Buffalo NY this week. I really appreciate John Quinn with SealMaster for participating, and taking the time to talk to me after the Customer Focus Presentation on Active listening and interaction. John's take away from today's event is something he can easily share with his team. He has the tools to help himself with his own active listener skills, while also helping to encourage further engagement from others at the office to do the same.

KNOWLEDGE IS POWER

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