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    period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there wi
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    Some Financial Analysts argue that using cash flow will provide a more accurate picture in determining the fair value of a common stock. What gives? They reason that investors should follow where the cash is. Cash flow will track the flow of cash in and out and this is the reason business exists; to get cash.

    Things are not that simple, however. Just as net income, cash flow can be easily manipulated. Cash flow here refers to cash flow from operations found on the statement of cash flow published regularly by publicly traded companies.

    Let's take a look at the statement of cash flow for one publicly traded company, Amazon.com (AMZN) and decipher its components. We will use the statement of cash flow for the year ending on 31 december 2004. Here is the source from Yahoo! Finance: http://finance.yahoo.com/q/cf?s=AMZN&annual

    The top part is net income, which is self-explanatory. This is what a company earns during a period of time. For the time period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there wil

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    ash in and out and this is the reason business exists; to get cash.

    Things are not that simple, however. Just as net income, cash flow can be easily manipulated. Cash flow here refers to cash flow from operations found on the statement of cash flow published regularly by publicly traded companies.

    Let's take a look at the statement of cash flow for one publicly traded company, Amazon.com (AMZN) and decipher its components. We will use the statement of cash flow for the year ending on 31 december 2004. Here is the source from Yahoo! Finance: http://finance.yahoo.com/q/cf?s=AMZN&annual

    The top part is net income, which is self-explanatory. This is what a company earns during a period of time. For the time period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there wi

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    cash flow published regularly by publicly traded companies.

    Let's take a look at the statement of cash flow for one publicly traded company, Amazon.com (AMZN) and decipher its components. We will use the statement of cash flow for the year ending on 31 december 2004. Here is the source from Yahoo! Finance: http://finance.yahoo.com/q/cf?s=AMZN&annual

    The top part is net income, which is self-explanatory. This is what a company earns during a period of time. For the time period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there wi

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    ear ending on 31 december 2004. Here is the source from Yahoo! Finance: http://finance.yahoo.com/q/cf?s=AMZN&annual

    The top part is net income, which is self-explanatory. This is what a company earns during a period of time. For the time period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there wi

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    period earns $ 588 M. To get into the cash flow figure, we need to add depreciation expense, subtract any increase in accounts receivable and inventory and add any increase in short term liability such as accounts payable. Sometimes, there will be some adjustments made to the net income which will increase or decrease cash flow depending on the charge.

    Now here is how companies can manipulate cash flow. This will in effect temporarily give an impression that cash flow has improved markedly.

    Temporarily Delaying Payment. This will increase Accounts Payable which in turn will improve cash flow. While only good companies can demand its suppliers to delay payments, all the debt eventually needs to be paid.

    Demanding faster payments from customers. While an efficient collection is needed for a firm's survival, giving less credit to customers will result in them balking away. In the short term, cash flow will improve due to improved collection. In the long run, customers will go to competitors who can offer better credit.

    Keeping a tight supply of inventory. While bloated inventory is wasteful, there is a certain level of inventory that is needed to keep a bus

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