Recent Articles

Cash Flow – A Basic Definition

Cash flow is the ability of a business to turn its product or service into cash. It is generally measured in dollars or in dollars against a time period. The simplest example I can think of is a child selling lemonade. The child purchases the lemonade and sugar in the morning, starts selling in the afternoon and by nightfall has turned all the lemons and sugar into cash. The child has the cash invested (lemons and sugar) back plus the profit made that day. However, it isn’t this simple in the real business world.

Cash Flow From Operations – Basic Formula

07/02/2017

The cash flows statement in accounting is broken out into three major sections as follows: 1) Cash Flow from Operations 2) Cash Flow from Investing 3) Cash Flow from Financing Of the three, cash flow from operations is the most prominent.   It [...]

Financial Statements for the Small Business

07/02/2015

Financial statements serve the purpose of presenting economic activity and status related to a particular date and over a particular time frame.  Accountants record monetary transactions and via financial reports present the information in an easy [...]

Insolvency and Bankruptcy – Know the Difference

02/01/2014

Every business owner needs to know the difference between insolvency and bankruptcy.  Often these two terms are misunderstood and improperly used in conversation.  You need to know their correct meaning because both are used in civil law and both [...]

Quick Ratio – Definition, Explanation and Proper Use

01/14/2014

The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities.  It is also known as the ‘Acid Test’ formula (ratio).  In the large markets this formula is one of the financial industry [...]

Inventory – How to Finance

04/16/2013

In financing a small business, there are a multitude of tools available.  One way to finance inventory is by using the 30 day pay program with your vendors.  Another tool is seasonal payment program and a third tool is exercising a line of credit [...]

What is Accrual Accounting?

02/11/2013

Accrual accounting is the preferred method of accounting for all business operations.  Any publicly traded company must comply with the principles of accrual accounting.  Small business operations can choose between cash and accrual accounting for [...]

Construction Draw Schedule

01/22/2013

A construction draw schedule is a financial tool used by contractors in identifying percentage of completion points in the project for the bank to advance proceeds to the contractor. The construction draw schedule is instrumental in keeping the [...]

Cash Flow – A Basic Definition

01/16/2013

Cash flow is the ability of a business to turn its product or service into cash.  It is generally measured in dollars or in dollars against a time period.  The simplest example I can think of is a child selling lemonade.  The child purchases the [...]

Cash is King – The Value of Cash Flow

11/19/2012

For any small business operation, getting cash into the bank account is critical to survival.  Without cash, the probability of success dissipates quickly.  So how do you get cash into the bank account?  There are several sources of cash: they [...]