Cash Flow

A popular song says: "Cash in king of everything around me." Another quote I remember says, "Elvis wasn't the king. Cash is the king." Investia.com says cash flow is

A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance...Cash flow is crucial to an entity's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business or person does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy should the insolvency continue.

Cash is for a business what blood is for a human. That's why the metaphors are there: a business is "liquidated." A business losing money is called "bleeding red ink." It's also been compared to gas in a car. Without cash a business cannot function. Without gas, a car won't go. A '76 Ford Pinto with gas is more valuable than a 2008 Jaguar without gas. Those who want to read about it should check out the Investia.com article. An excellent book I've used is Bill McGuinness, Cash Rules (New York: Kipplinger Books, 2000).

If you find this interesting, post a comment. And check out my real estate 2.0 blog, www.yourstopforrealestate.com/blog, and my writing 2.0 blog, www.kearneymusicschoolmurders.blogspot.com.