Cash Flows

Having a strong Balance Sheet provides the foundation to endure. A Balance Sheet takes all the stuff you have “on the surface” and shows what is yours and what is borrowed. Solvency is when you own more than you owe. When you have resources to draw on should things get tough. When strength runs deep. Liquidity is more short term. It is about resilience. Even if you are normally able to endure, sometimes things are not normal. Liquidity prevents you from being a forced seller. It ensures you consent to the decisions you have to make. The Cash Flows when you turn the tap. The Income Statement is where the rubber hits the road. Like the Balance Sheet, “Revenue” is what gets seen, but what matters is the bottom line. Are you being creative? Is what you are doing making more than it is costing. A strong balance sheet can sustain you through breathing periods of poor creativity. Strong cash flows can prevent you from having to do things you don’t want to do. But creativity is what the whole show is about, and for that, you need to look below the surface.