Managerial implications
It is very likely that cash flow helps to grow sales. If companies are trying to decrease their COGS, it is better to invest in their delivery process and to decrease it gradually. Good planning of the supply chain can help to decrease the amount of remaining inventory, and it is also a gradual program. A considerable amount of positive cash can increase the gross margin and also operating margin. Gross margin also has an effect on operating margin. Interestingly, a high amount of prior years’ ROA decreases the money for operations of the company. Net margin of this year is a function of prior years’ operating margin and cash flow. Operating margin and cash flow of prior years’ affect the amount of ROA. Last, but not least a high amount of ROI in this year is a function of prior years’ net margin.