You Know the Difference Between Cash and Profit. Right?

BNET TalkbackShare your ideas and expertise on this topic

Subscribe to this discussion via Email or RSS

•  
  1

  mschwartz33

  11/06/09 | Report as spam

  RE: You Know the Difference Between Cash and Profit. Right?

  Yes, with cash you survive, with profit you grow. Cash measures liquidity, or can you pay today's bills? Profits measure performance, or how well you are doing.

•  
  2

  mschwartz33

  11/06/09 | Report as spam

  RE: You Know the Difference Between Cash and Profit. Right?

  I made a good living on what corporate people did not know about finance, analysis, and what balance sheets and income statements are all about.
  Two of my famous (some say infamous) axioms of finance are:
  1. You do not finance risk with debt, and:
  2. The function of a bank is not primarily to lend money, but to be paid back.
  I was also a professor of finance and economics. MUS

•  
  3

  seansilverthorne@...

  11/07/09 | Report as spam

  mschwartz33

  Hope you were paid handsomely for your great advice. Risk management is the great needed skill for today's business manager.
  
  Sean

•  
  4

  mschwartz33

  11/08/09 | Report as spam

  RE: You Know the Difference Between Cash and Profit. Right?

  Thanks, Sean. I was paid fairly well for what I did. Didn't get what Bill Clinton or some of the others on the lecture circuit, but a good supplement to an academic's living.
  
  
  
  
  I was consulting (creating seminars and workshops) for Citicorp while I was Chair of the undergraduate Finance Dept. at Pace University. Created a number of workshops on "risk management" using basic derivatives (swaps, options, futures). And,, workshops on basic balance sheet and income statement use and analysis, and corporate finance.
  
  
  
  
  
  
  
  
  But, risk management can also be a good control and understanding of cash flow,too. It doesn't have to be too obscure.
  
  Ever hear of a "roller coaster swap" or a "look back" option? Citi invented the "plain vanilla" swap in 1979. From that point, there was no turning back. Derivatives are not the problem, some people who use them are. It just got too complicated for auditors (and professors!) to understand.
  
  In the 80's Citi was hiring physics majors who understood wave motions and math that I never did, to create the exotics. Too bad they never learned to control the people who used them, or the firms who oversold them, with not enough capital structure (AIG!) Thanks for your comment. Mike