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Cash Flow 3.0: Advances in Cash Flow Lending based on Sustainable Cycles

Cash Flow 3.0: Advances in Cash Flow Lending based on Sustainable Cycles

ISBN: 9781491077597
Publisher: CreateSpace Independent Publishing Platform
Publication Date: 2013-08-30
Number of pages: 176
Any used item that originally included an accessory such as an access code, one time use worksheet, cd or dvd, or other one time use accessories may not be guaranteed to be included or valid. By purchasing this item you acknowledge the above statement.
$37.10

Cash Flow 3.0 introduces cutting-edge advances in cash flow analysis and cash flow lending. Bold statement? Consider this: Traditional analysis says that AT&T is illiquid because it reports a multi-billion dollar negative working capital. Yet AT&T pays it trade creditors every year and is rewarded with top credit ratings. Clearly there is a flaw in our traditional measures of liquidity. Small and Medium Enterprises (SMEs) are not as fortunate as AT&T. Banks routinely—and erroneously—deny credit to SMEs that report a negative working capital, a flawed sign of illiquidity. The flaw was first made public in April 2012 in the Journal of Accountancy: there is an account missing from the balance sheet! The missing account—the Current Portion of Fixed Assets (CPFA)—is one of several discoveries that emerges from a new framework that views cash flow in terms of sustainable cycles. Better Credit: Cash Flow 3.0 sharpens the measurements of debt repayment by pinpointing the cash flow that should repay a loan within its natural cycle (new primary coverage ratios). In contrast, “hybrid ratios” like the traditional long-term debt service coverage ratio (DSCR) and the flawed current ratio include cash that flows from other cycles. Cross-cycle cash flow explains how AT&T pays its creditors despite a multi-billion dollar negative working capital (cross-cycle repayment), and answers old questions like, “Can a term loan be made to finance a permanent increase in working capital?” (cross-cycle financing). Better Sales: Viewing cash flow in terms of natural cycles is so logic, so intuitive, that it enables lenders to discuss (and sell) a “strategy for financing growth” with SME clients in the field. More about the book: www.sme-lending.com

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