Businesses with great products and services fail because of improperly managed cash flows. Learn the difference between net income and operating cash flow and how to manage your cash flow for growth.
- Hi, I'm Kay Stice. I'm a professor of accounting at Brigham Young University and this is my brother Jim. - I'm also a professor of accounting at Brigham Young University. - In this course, we address the important topic of cash flow analysis. - [Voiceover] Now, many good business 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 it's cash flow to be able to repay its loans, pay its employees, pay its suppliers and pay its taxes.
- [Voiceover] In this course, we'll discuss the basics of cash flow analysis. We will take a detailed look at that most wonderful of all financial statements, the statement of cash flows. - [Voiceover] We will learn what a cash cow is. And we'll give you a look at the famous Jim Stice operating cash flow matrix. - [Voiceover] To show you how important cash flow is, we will take a look at the cash flow numbers for Home Depot back in 1985 and see that the company's cash burn rate had placed them just three weeks from death because of cash flow problems.
- [Voiceover] And we will tell you about a company that was poised to break the world's record for amount of operating cash flow generated in one year. - Now before taking this cash flow analysis course, you might consider taking our accounting fundamentals course. Among other things, that course introduces you to all three financial statements: the balance sheet, the income statement, and the statement of cash flows. - [Voiceover] With that said, we have designed this cash flow analysis course to be self contained. And we carefully explain any terminology that we use. - In short this is an introductory course with no prior accounting knowledge necessary.
- All you need is an interest in cash. Let's do some cash flow analysis. - Let's do that.
Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
Lynda.com is a PMI Registered Education Provider. This course qualifies for professional development units (PDUs). To view the activity and PDU details for this course, click here.
- Differentiating between net income and operating cash flow
- Categorizing cash flow
- Using financial data to deduce cash flow
- Managing operating, investing, and financing cash flows
- Typical cash flow patterns
- Converting net income into operating cash flow
- Improving operating cash flow