We all know the cliché that ‘cash
is king’. For many investors, cash
and cash flow are not only a critical
area of focus when analysing value
and value creation, they also help in
analysing liquidity.
Despite its omnipotence in the
world of valuation, investors tell us
that the practicalities of assessing
cash flow can present challenges to
even the most seasoned investment
professional.
In the first issue of The Essentials, we
offer some insight on the accounting
Standard1
that covers the cash flow
statement and discuss how it plays a
role as an input in commonly used
methods of assessing a company’s
cash-generating capabilities.