What, exactly, is cash flow? Can the entirety of a firm’s cash
flow be accurately and concisely measured? If so, can it be usefully
interpreted? And then, what is its relationship to other financial
metrics? How does cash flow support the ultimate value of the firm?
And, most importantly, are today’s financial professionals prepared
to fully understand the information available in cash flow analysis?
These questions lie behind a growing trend in today's financial markets
— a trend that demands a solid and legitimate framework for
delivering shareholder return through cash flow.
The book begins its discussion of cash flow by examining a growing
information gap within the corporate finance department. While
reviewing this information gap, two concepts are explained. First,
cash flow is integral to measurements of a firm’s profitability,
value, and stability. Second, a clear vision to cash is not commonly
available in today’s finance department. These two conflicting
realities complicate the firm’s managerial objective—that is,
producing wealth for its stakeholders—and ultimately impede economic
return. As such, this book strives to explain cash flow so as to close
the information gap.
This book teaches a basic methodology for reporting and analyzing cash flow.
It concentrates on the day-to-day financial management of the firm
and introduces a system for obtaining a comprehensive and immediate view into firm activity.
That system is Actual Cash Fow™.
Interestingly, changes to financial reporting loom in the
background of this work. This forces a deeper look into the evolving dimensions of
GAAP, which appear to be changing in response to the same demands
that justify the Actual Cash Flow™
system. It is in this relationship that the reader can understand
how the internally focused Actual Cash Flow™
system can not only assist financial professionals to enhance their
view inside the firm but can also sharpen their approach to
financial reporting.