Thread by @hafizul09

**Importance of CASH FLOW**

1) Company can inflate Revenue BUT not CASH
2) Compare last 5 years total Net Profit vs CFO-if total CFO is significantly less,it means, company is not able to collect cash from customer on time or recording revenue ahead of time/cash -negative

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3)Always look into "Account Receivable"(AR) along with the CFO and see the trend-if AR increases, CFO decreases over the years, it means company is heading for trouble and either will have to take additional debt for Working capital or some write off may come -both negative

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4) Look into Free Cash flow (FCF) - which is basically CFO minus CAPEX - this is available to company for return to shareholders (can be dividend, interest, buy back etc.) or debt reduction etc. Hence it is imperative that FCF is Positive. If negative, investigate reasons.

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5) Look at inventory vs CFO trend - company might be running out of cash for supporting operations, if inventory increases but CFO reduces over the time - may force to take WC loan.

6) Look at CAPEX (Cash flow from Investing activities) vs CFO vs Debt trend to know - how

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much cash company earning, investing and how they are doing it-is it via additional debt(negative) or via CFO(positive).

Cash flow is an excellent Tool to look into company's real health and investigate if any cooking in BS vs Income statement.

Never Ignore Cash flow..🙏🙏

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