Earl K. Stice, Chair of Accounting and Finance at Nazarbayev University Graduate School of Business, has recently published an article on importance of cash flows at the National Business Magazine.
The international news during July 2015 was dominated by Greece and its national debt. Greece has been involved in acrimonious negotiations with the European Union and the International Monetary Fund regarding ongoing debt payments and debt restructuring.The reason that Greece has been in the news is that the country does not have the cash flow to make the payments currently due on its loans. The problem of Greece is not the size of the national debt; instead, the problem is a lack of cash flow.Similarly, many good businesses have died a premature death because they didn’t properly manage their cash flow. Loans are repaid with cash. Employees are paid with cash. Suppliers are paid with cash. Taxes are paid with cash. A company can’t live very long when it doesn’t properly manage its cash flow to be able to repay it loans, pay its employees, pay its suppliers, and pay its taxes.
You can read the full version of the article here: