Running a Profitable Business: Understanding Cash Flow

Introduction

• Understanding cash flow analysis

1. The Importance of Cash Flow Analysis

• Home Depot, 1985: Case study
• Net income is not the same as operating cash flow
• Cash flow problems kill companies

2. Overview of the Statement of Cash Flows

• Introduction to the statement of cash flows
• Overview of the statement of cash flows
• Practice categorizing cash flows
• Deducing cash flow statements
• Interpreting Walmart's statement of cash flows

3. Using Cash Flow Data to Make a Loan Decision

• Mortgage loan application
• Interpreting free cash flow statements
• Relationships in cash flow statements
• Determining loan decisions
• Classifying a cash cow company

4. Convert Income Statement Data to Operating Cash Flow Data

• The Jim Stice operating cash flow matrix
• Understanding the direct method
• Understanding the indirect method
• Operating cash flow data as an IPO reality check
• Identifying economic performance
• Operating cash flow problems from high growth

5. Managing Cash Flow

• The Home Depot story revisited
• Managing operating cash flow
• Managing investing cash flow
• Managing financing cash flow

6. Cash Flow Numbers for Some Real Companies

• Tough times in 2008, except for Exxon Mobil
• Analyzing General Motors’ free cash flow
• Apple: Cash flow data helps unravel accounting issues
• The danger of free cash flow

Conclusion

• Manage company cash flow