When your business generates cash from operations, you must use it to fuel further growth. Simply holding cash will make your company stagnate and eventually decline. There are six options for cash allocation: paying dividends, share buybacks, holding cash, paying…
What’s the secret to keeping your coffers full while growing rapidly? Enter Return on Assets (ROA) – your ticket to cash flow mastery. Why ROA is Your New Friend ROA, calculated as net profit divided by total assets, is more…
Imagine you’re running a company with two divisions: Job A and Job B. Both bring in $100 in sales, but their profits tell a different story. Job A rakes in a healthy $40 profit, while Job B barely scrapes by…
The Early Cash Crunch Some business models are cash intensive, especially during rapid growth. Netflix’s journey from struggling DVD rental service to streaming giant offers crucial lessons on managing severe cash flow challenges – and how they could have done…
In the aftermath of the dot-com bubble burst in 2000, Salesforce found itself in a precarious position. The once-booming tech industry was now a wasteland of failed startups and skeptical investors. Venture capitalists, burned by the collapse, were no longer…
Ever wonder how Amazon manages to be so cash-rich while constantly investing in new ventures? The secret lies in an unexpected place: their accounts payable. Let’s dive into the fascinating world of Amazon’s cash flow strategy. The Marketplace Magic At…
Reducing stock levels is one of the most powerful things a business can do to improve cash flow and lower operating costs. Yet most businesses treat inventory as a necessary evil — something you accumulate as sales grow. The smarter…
PDD (Pingduoduo) is a genius cash-creating monster. Even when it made a loss of 1 billion in 2020, it generated a 4.5 billion positive operating cash flow. After that, it started making profits, creating even more cash flow. PDD operates…
The department store industry is hit hard by COVID and e-commerce, becoming less profitable. But only Dillard’s achieved a fat profit margin, and its stock price became insanely 15 times higher since April 2020. Why? The net income rate (net…
Inventory is one of the biggest hidden cost drains in any business. Most companies focus on the purchase price of their stock — but that is just the beginning. Every day inventory sits unsold, you pay for it: warehouse space,…