By Shreesha
This is the Final Chapter of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. More In The Series Throughout this series, we’ve explored how businesses grow, create value, generate profits, convert those…
This is Chapter 5 of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. More In The Series Generating cash is only half the story. What separates exceptional businesses from merely good ones…
This is Chapter 4 of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. More In The Series Profits do not pay salaries. Cash does. A business can report record earnings while struggling…
This is Chapter 3 of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. In This Series Growth alone does not guarantee higher profits. Some businesses become dramatically more profitable as they scale,…
This is Chapter 2 of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. In This Series Not all revenue creates value. Two businesses can generate identical sales yet produce vastly different profits…
This is Chapter 1 of The Economics Behind The Numbers — a six-part guide on understanding financial statements through business economics. In This Series Every great business begins with a simple objective: create value for customers. Revenue is the financial…
Since accounting is based on the accrual concept, accounting earnings often differ significantly from the cash that actually flows into and out of the business. ACTUAL Cashflows (Not Cashflow From Operations) Adjustment Why it is needed (+) Non-cash expenses (Depreciation, Amortization) These…
Situation Which Is Greater? Reason Credit sales Earnings > Cash flow Revenue before cash Increase in Receivables Earnings > Cash flow Cash not collected Revenue Recognition from Prior Advances Earnings > Cash flow No new cash Situation Which Is Greater?…