Cash Is King

Businesses large and small depend on cash. Cash is the main measuring tool of financial stability and health. Cash production is also the main element in most business valuations. Wealth Advisors will analyze cash on the balance sheets of publicly traded companies to help make investment decisions. Cash is King! Small companies also have advisors who will focus their efforts on calculating cash balances, cash used, and cash generated by the business.

It’s very important to listen to the advisors, such as CPAs because they have experience in dealing with cash crunches and how to avoid them. Cash is critical to support businesses in good times and bad. When times are good, cash is required to build inventory, buy equipment, pay suppliers, and pay employees, etc, etc. When times are bad, cash is still required to operate the machines, maintain inventory levels, and keep the doors open.

Too often, cash balances are used to pay for boats, cars, and other fun stuff that does not support business operations. Owners can get too complacent and spend versus preserve. Of course, business ownership is a terrific way to build wealth, but keeping it is very important too!

Contact an Apex Business Advisor to assist in the sale or purchase of a business.

Doug Hubler
President