3 ms·

> can represent what's going on in any org in ways that can be roughly comparable. It can also obfuscate it pretty well!

by yread 3y ago

actionfromafar 3y ago
Obligatory "Seeing Like a State" reference.
PopAlongKid 3y ago
That's where statement of cash flows[0] comes in -- because over a long enough time frame, profit is just cash in minus cash out. Hard to obfuscate that. Companies usually go bankrupt not because of negative net worth, but because of insufficient cash flow. [0]the third basic type of statement, in addition to balance sheet and profit & loss.
- Solvency 3y ago
  so why isn't there a single cash flow view/report that all businesses use rather than all of these bloated and apparently ineffective methods? PL etc..
  - joncrocks 3y ago
    Cash flow is not just what is happening, but what will happen. i.e. the difference between when money goes out vs. it coming in. If you are selling widgets for $1.20 and buying them for $1, and they are delivered after you order them, you are limited on how many open orders you can have at any point in time even though you make money on each order. A companies cash flow will be dependent on employees, capital expenditures, money for stock, returns rates, tax requirements etc. etc. So it's heavily dependent on what type of business is being run and the specifics of how the business is being run.
  - PopAlongKid 3y ago
    There is a cash flow report that all (public) businesses use -- as I said, it is one of 3 basic reports that capture different aspects of the companies financial performance. You need all 3 for a complete picture. The cash flow statement helps "unobfuscate" certain aspects of the other two reports (which I hope you agree are not pure obfuscation). For example, see this Apple Corp. financial report[0] -- it includes a statement of cash flows. I think you'd find that all other companies required to publicly share their financials will include the same report. [0]https://www.apple.com/newsroom/pdfs/FY22_Q4_Consolidated_Financial_Statements.pdf https://www.apple.com/newsroom/pdfs/FY22_Q4_Consolidated_Fin...

> can represent what's going on in any org in ways that can be roughly comparable. It can also obfuscate it pretty well!

by yread 3y ago

> can represent what's going on in any org in ways that can be roughly comparable. It can also obfuscate it pretty well!

actionfromafar 3y ago

Obligatory "Seeing Like a State" reference.

PopAlongKid 3y ago

That's where statement of cash flows[0] comes in -- because over a long enough time frame, profit is just cash in minus cash out. Hard to obfuscate that. Companies usually go bankrupt not because of negative net worth, but because of insufficient cash flow. [0]the third basic type of statement, in addition to balance sheet and profit & loss.

Solvency 3y ago
so why isn't there a single cash flow view/report that all businesses use rather than all of these bloated and apparently ineffective methods? PL etc..
- joncrocks 3y ago
  Cash flow is not just what is happening, but what will happen. i.e. the difference between when money goes out vs. it coming in. If you are selling widgets for $1.20 and buying them for $1, and they are delivered after you order them, you are limited on how many open orders you can have at any point in time even though you make money on each order. A companies cash flow will be dependent on employees, capital expenditures, money for stock, returns rates, tax requirements etc. etc. So it's heavily dependent on what type of business is being run and the specifics of how the business is being run.
- PopAlongKid 3y ago
  There is a cash flow report that all (public) businesses use -- as I said, it is one of 3 basic reports that capture different aspects of the companies financial performance. You need all 3 for a complete picture. The cash flow statement helps "unobfuscate" certain aspects of the other two reports (which I hope you agree are not pure obfuscation). For example, see this Apple Corp. financial report[0] -- it includes a statement of cash flows. I think you'd find that all other companies required to publicly share their financials will include the same report. [0]https://www.apple.com/newsroom/pdfs/FY22_Q4_Consolidated_Financial_Statements.pdf https://www.apple.com/newsroom/pdfs/FY22_Q4_Consolidated_Fin...