Being short of cash has very little to recommend it, and it is one of the most stressful situations that a business owner can face. To add to this stress, weak or negative cash flow often brings with it decreased profitability that is linked directly to the lack of cash in a business. This occurs in the form of both increased expenses and reduced productivity and in their different ways these can be equally harmful.
One of the most important things to measure is cash generated from operations each month, and I like to do this in two stages. The first stage is to turn the P&L into Cash Generated from Operations. The second step is to produce a statement that I call Quick Cash Flow – an approach which links the Profit and Loss and the Balance Sheet in a very effective fashion.  Click here to complete your own analysis.