TAILIEUCHUNG - Cash Rules: Learn & Manage the 7 Cash-Flow Drivers for Your Company's Success_5

Tham khảo tài liệu 'cash rules: learn & manage the 7 cash-flow drivers for your company's success_5', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Sales Growth The Dominant Driver Returning now to the purely proportional effects of sales growth keep in mind that many line items and subtotals on the financial statements are likely to be affected. Balance-sheet changes are almost invariably driven by sales revenue. Changes in the income statement start at the first line that is revenue and follow from there generally in a somewhat proportional way. Finally the cash-flow statement is affected as it is assembled from the integration of the balance sheets and income statement. If growth consumes cash is it not then logical to assume that negative growth that is a sales decline can generate cash Most of the time this will prove to be true as lower levels of assets are needed to keep the business running smoothly albeit at a somewhat lower sales level. With lower sales rippling through the business supporting assets can therefore be converted to cash. Most obviously this applies to inventory and accounts receivable. Theoretically and ultimately though it applies to any class of asset and to most categories of expense. Growth That Ripples A shift in sales volume either upward or downward ripples through the company in a similar direction. Limits to responsiveness in sales-volume changes are based on what s called the step-function nature of many assets and costs. Step function refers to the fact that a lot of resources can be acquired or divested only in large chunks or steps bigger than may suit you at the moment. For example a drop in sales volume necessarily cuts into your ability to pay for those fixed costs that don t automatically decline with drops in sales volume. Your landlord doesn t sympathetically take back 20 of the warehouse space you ve been occupying and cut your rent proportionally just because you experience a 20 sales drop. The result is that it is relatively easy to have excess capacity in multiple aspects of your business at any given time. One saving grace though is that big fixed costs that is

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