I want to spend a few minutes today to talk about cash
You probably heard the expression cash is king
That's true in two senses
Claims
The definition of claims in finance
Are valued based on their expected cash flow
Complete
In times of difficulty
Company without sufficient cash balances made
Make face bankruptcy
A cash flow is
Is a cash payment into or out of company
Typically cash flows occur over a period of time
Icash stock
Your cash position
It's a balance of cash that is held in the bank accounts of a company
Icash stock
Is
The amount of cash available at an instant of
Time
Cash stock
Is a use of financing
So clearly i'm just in
Introduce two concepts the first concept was a cash flow concept and the second was a catch
Stock
I introduce the managerial balance sheet one of the six
Part 2 the man you energy or balance sheet
Which cash we can think of a cash flow at a change in cash balances
From the beginning of the year which i'll call you
Year 08
Time zero the balance
How cash at
At x 0 and that would change
To about the end of the year and i'll call that she won
For the change from c
02 c1
Is the cash flow
And clearly cash flow
Comes
Hartley from operating income
The cash flow is not same as operating income cash flow is greater
Then operating income to the extent that we have
Positive depreciation
Can amortize a shin
That reduce income relative to
Cash flow
Operating cash flow
It's all so different from operating in
Income
To the extent that are
Peebles
And are receivables at our inventories and
Can other parts of the working capital requirement change
Clearly fr
Working capital
Requirement increases
And it seems to do here shrimp to hear
Net increase
Must be financed
If the
The
Sources
How financing remain exactly the same
Then
Get my feet
Finance
By changes in cash balances
Cash flow from operations is
Is part of the
The overall change in
Cash
Author
Items
Change the cash balance
Maxwell
Among them are
Changes in the fixed assets
And the
Changes in financing we
We have to remember three kinds of financing short-term debt
Long-term debt equity
If short-term debt in
Increases
Danby have a positive cash flow if
Long-term debt
Decreases
Can we have a negative
Cash flow from the long-term depth
If paid in it
Equity
Decreases through an equity repurchase then we have
Negative
Cash flow
All of these together
Account for the
The change
In cash