18 Aug 2010
Could You Make $6 Billion & Still Be Bankrupt?
Rhondalynn Korolak, Author of "Financial Foreplay®" and "On The Shoulders of Giants
If you’re a small-mid size business owner and struggling to make your operation both profitable and cash flow positive, don’t beat yourself up too much! Even some of the largest corporations in this country are getting it wrong and stuffing up every day. Take the CBA for example – one of the largest banks in Australia recently announced a $6 billion profit for 2009-10. To put this in context, this equates to around a 17 per cent return on investors’ funds, which is impressive indeed in these tough economic times.
Too bad the CBA is technically bankrupt – meaning they don’t have enough liquid assets to cover the debt as it is coming due.
But how can this be, you might ask? The answer is simpler than you might think and it applies to ALL companies (big and small) – Profit is pointless and cash flow is KING! More businesses in Australia go under every year due to lack of cash flow than any other single reason. No business, even financial institutions which are afforded many governmental protections and safeguards, are exempt from this basic law of the economic jungle.
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18 Aug 2010
Could You Make $6 Billion & Still Be Bankrupt?
Rhondalynn Korolak, Author of "Financial Foreplay®" and "On The Shoulders of Giants
If you’re a small-mid size business owner and struggling to make your operation both profitable and cash flow positive, don’t beat yourself up too much! Even some of the largest corporations in this country are getting it wrong and stuffing up every day. Take the CBA for example – one of the largest banks in Australia recently announced a $6 billion profit for 2009-10. To put this in context, this equates to around a 17 per cent return on investors’ funds, which is impressive indeed in these tough economic times.
Too bad the CBA is technically bankrupt – meaning they don’t have enough liquid assets to cover the debt as it is coming due.
But how can this be, you might ask? The answer is simpler than you might think and it applies to ALL companies (big and small) – Profit is pointless and cash flow is KING! More businesses in Australia go under every year due to lack of cash flow than any other single reason. No business, even financial institutions which are afforded many governmental protections and safeguards, are exempt from this basic law of the economic jungle.
Read More
Rhondalynn Korolak, Author of "Financial Foreplay®"
Imagine you are playing an important game of tennis. It’s the club final and you are the favorite to win. There is a big crowd watching and as the game progresses, everything seems to be going to plan. You’re playing well and you’re winning points. Victory can’t be far away. There is only one problem: there is no scoreboard, and the umpire is keeping the score to herself. So no one except the umpire knows what’s really going on.
Nevertheless, you plough on and, despite being in the dark about the score, you feel positive that eventually the umpire will declare you the winner. You are so confident that you can’t help but relax just a little. You start enjoying the party like atmosphere.
