Cash is king

Cash is king

Cash is king is a cliched expression sometimes used in analyzing businesses; it refers to the importance of cash flow in the overall fiscal health of the business. The phrase is a favorite of Alex Spanos and has sometimes appeared in Motley Fool articles and commentaries. It describes the importance of sufficient cash as an asset in the business for short term operations, purchases and acquisitions. A company could have a large amount of accounts receivables on its balance sheet which would also increase equity, but the company could still be short on cash with which to make purchases, including paying wages to workers for labor. Unless it was able to convert its accounts receivable and other current assets to cash quickly, it could be technically bankrupt despite a positive net worth.

External links

* [http://www.fool.com/news/foth/2000/foth001121.htm Fool on the Hill — Cash is King] - Motley Fool opinion article stressing the importance of examining cash flow statements.
* [http://www.ameinfo.com/66656.html Cash is king in a recession!]


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