All these wordings are not originally coming from me, somehow I read there somewhere and they are stuck on my mind.


Do you need Bank or Bank Services?

What does a cash flow mean to the company? Have you ever heard people said Money is sweetener than Honey.

Which one is more convincing? Someone showing you that he has huge cash or someone showing you the balance sheet? Cash is real….

If someone just gave you the income statement without the other statements (balance sheet, cash flow) (Note: remember Enron’s case), you’re better off to be careful…Income statement can’t be judged without really looking at the balance sheet and cash flow statements. All are from the same coin. As a coin, there is no half-coin. You either have an intact coin or no coin at all.

If your customer doesn’t pay you in due time, or asking you to give them extended credit after the due date, it means you’re lending them more, or they’re borrowing from you. It’s sometimes a bit confusing this since no cash flow outflows…yet, if you are thinking it a while, it could mean you receive the receipt first and then give back the money to the debtor. It might stay at the same account : Accounts Receivable. If the debtor doesn’t give you interest on that extended period, then it means you subsidize the interest since you need to finance that Receivable somehow. Need to calculate the interest then, don’t forget using the Compounded Annualized Interest!

If someone is showing that his/her company has an outstanding sales growth (also look at the balance sheet)…then you need to think about who finances that growth…Someone somehow should finance that growth…Other People’s Money! It might be vendor/supplier?

Is electronic money real money? Is it not debited out from your bank account? Still under your control over the spending, but it is a money to spend!

Instead of being happy, watch out if the company’s working capital increased! A French consumer goods company whose CEO announced in 2001 with considerable pride, “Our working capital has increased from €1 million to over €4 million with our current ratio rising from 110% to 200% and the quick ratio rising from 35% to 100%.” The company declared insolvency six months later. (taken from : Need Cash? Look Inside Your Company, Kevin Kaiser and S. David Young, Harvard Business Review May 2009)

If you are sitting with your problems, someday, it will become everybody’s problems.


Close behind options in importance is the thought that a project consists of many series of cash flows and that each series deserves its own specific risk adjusted discount rate. Decomposing the cash flows of an investment may lead to significantly different results than the calculation of the net present value of an investment’s net cash flow. Even the use of one risk adjusted rate for a series of cash flows must be
questioned. Under what conditions is it correct to use (l  r)n with the same r for all values of n to compute the present value of a cash flow? (page XVII-XVIII, Advanced Capital Budgeting, Harold Bierman Jr. and Seymour Smidt)


I really don’t know one plane from the other…to me they are all marginal costs with wings.

Alfred E. Kahn, C.A.B. chairman. New York Times, April 23, 1978.

Ten percent of what I teach is wrong and should be ignored. The problem is that I do not know which ten percent.

Cornell University Professor


Young professor : how can you get away with asking the same examination question each year?

Old professor : the answers change.



Quoted from The Capital Budgeting Decision: Economic Analysis of Investment Projects. Fifth Edition. Harold Bierman, Jr., and Seymour Smidt. Macmillan Publishing Co., Inc.. 1980.


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