23/07/2024
https://www.facebook.com/share/jWbf8Cy1BKrbjZUF/?mibextid=WC7FNe
CONTACT FOR ALL YIUR PERSONAL AND BUSINESS FINANCIAL ADVICE AND HELP.
𝐇𝐚𝐯𝐞 𝐲𝐨𝐮 𝐞𝐯𝐞𝐫 𝐰𝐨𝐧𝐝𝐞𝐫𝐞𝐝 𝐰𝐡𝐲 𝐬𝐨𝐦𝐞 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐬𝐮𝐜𝐜𝐞𝐞𝐝 𝐰𝐡𝐢𝐥𝐞 𝐨𝐭𝐡𝐞𝐫𝐬 𝐝𝐨 𝐧𝐨𝐭?
A study has shown that only 20% of start-up companies survive the first 5 years of business.
𝐋𝐞𝐭 𝐮𝐬 𝐥𝐨𝐨𝐤 𝐚𝐭 𝐭𝐰𝐨 𝐬𝐜𝐞𝐧𝐚𝐫𝐢𝐨𝐬
Company A and Company B are both manufacturing companies
The two companies started operation the same year
Both companies made an annual turnover of $1(one million dollars) each. 5 years down the line company A goes bankrupt and goes out of existence while company B has grown to generate a turnover running in millions of dollars.
𝐖𝐡𝐚𝐭 𝐡𝐚𝐩𝐩𝐞𝐧𝐞𝐝
𝐖𝐡𝐚𝐭 𝐦𝐚𝐝𝐞 𝐭𝐡𝐞 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐭𝐡𝐞𝐬𝐞 𝟐 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬?
The answer is in the cashflow statement of both companies
Cashflow is simply the movement of cash in or out of a business
For instance, when running a manufacturing company, you need cash to pay workers, suppliers, business loans and other commitments.
As long as the money that comes in can meet up with these commitments your cashflow is in a healthy state.
𝐓𝐡𝐞𝐫𝐞 𝐚𝐫𝐞 𝐭𝐰𝐨 𝐭𝐲𝐩𝐞𝐬 𝐨𝐟 𝐜𝐚𝐬𝐡 𝐟𝐥𝐨𝐰
𝐏𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐜𝐚𝐬𝐡𝐟𝐥𝐨𝐰 𝐚𝐧𝐝 𝐧𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐜𝐚𝐬𝐡𝐟𝐥𝐨𝐰
When a company's revenue exceeds its expenditure, it has a positive cash flow
And when a company's expenditure exceeds the company revenue, the company has a negative cashflow
As a business, 𝐡𝐨𝐰 𝐡𝐞𝐚𝐥𝐭𝐡𝐲 𝐢𝐬 𝐭𝐡𝐞 𝐬𝐭𝐚𝐭𝐞 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐜𝐚𝐬𝐡𝐟𝐥𝐨𝐰?
For more information on how to manage your cash flow, kindly reach out to the link below https://wa.me/237679452833