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Type of Securities Investment Strategies Fundamental Analysis Technical Analysis
Understanding Financial Statements Income Statement Analysis Balance Sheet Analysis Cash Flow Analysis Shareholders' Equity Analysis Ratios and Definitions

Cash Flow Analysis

 - The effects of growth on
    cash flow and earnings

 - How free cash flow
    benefits investors

 - Don’t blame EBITDA for
    your losses
 - The borrowing base
    impacts cash flow and equity
 - The debt repayment
     schedule can predict a
     liquidity crisis




The debt repayment schedule can predict a liquidity crisis

An important part of reviewing a company’s cash flow is to determine if the company has the ability to meet the future cash demands on the organization. The annual footnotes disclose the maturity dates of a company’s long-term debt and operating lease obligations.

The balance sheet, P&L, cash flow and footnotes, reviewed as a cohesive picture, can predict if a company has an upcoming liquidity issue.

The debt repayment schedule is simply the “roll out” of mandatory debt repayment due dates. Companies need to have the wherewithal to meet these obligations. Investors, moreover, need to ensure themselves that a company has a clear vision (and supporting resources) of how to pay their liabilities as they mature. Stock values can evaporate overnight if liabilities cannot be repaid.

A quick review of the debt due date schedule can alert investors if a company needs outside financial assistance to meet its obligations. This is equivalent to the “smoking gun,” because money is the hardest to come by when needed the most.   



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