4 ms·
> Outside of accounting, there's a tendency to dismiss this nuance as trivial and convergent in the long term. In reality, the future never comes. It's always t
by fairity 6y ago
> Outside of accounting, there's a tendency to dismiss this nuance as trivial and convergent in the long term. In reality, the future never comes. It's always the present.
So long as you're running a profitable business, cash flow management does seem to be a pretty trivial problem. The difference between positive and negative float is just a loan. And, if you can show a bank that cash is guaranteed to come in at a future date, you will have no problem bridging the gap with a loan or line of credit.
- mpmpmpmp 6y agoThere is no such thing as "cash is guaranteed to come in at a future date". Counterparty risk is pretty much impossible to remove, only to trade away to another party.
- dalbasal 6y agoOr said another way, the model is not reality. It is a way of reasoning about reality, approximate reality, etc. Reality is not arbitrage-able without artifacts.
- dalbasal 6y agoThis is exactly the fallacy this article is challenging. It is simply not true in business reality, whatever the chalkboard fungibilities. The difference between a positive and negative float is a structural difference that has long reaching implications. On that chalkboard, the difference between a publicly listed company and a family owned business is trivial or esoteric.. best explained by portfolio theory or somesuch. Sometimes abstractions miss the point.