| This is part 4 in an 8-part series about the B-I Triangle | | | | Statements enables a business to be able to spot |
| (TM) put forth by Robert Kiyosaki in his book "Rich | | | | trends in the company's performance over time. If |
| Dad's Guide to Investing".Cash Flow Management is | | | | trends can be localized early enough, the business |
| absolutely essential to a company's ability to fulfill the | | | | may begin to evaluate what factors led to the trend. If |
| stated mission. Cash Flow is the lifeblood of any | | | | it's a downward trend, the comapny might be able to |
| business enterprise. Cashflow can be likened to the | | | | reverse a previously made suboptimal decision, or |
| blood pumping through your body right now. You have | | | | further capitalize from upward trends.Basic parts of |
| a vast network of arteries and veins which carry | | | | the financial statement are as follows:* Income |
| life-giving and life-sustaining blood and oxygen to | | | | Earnings Statement* Expense Statement* Balance |
| different parts of your body. The body, through it's | | | | SheetThe first two are fairly self-explanatory. The |
| own autonomic ability to control flow rates in each | | | | balance sheet is a sort of snapshot of where your |
| area, mainains a perfect balance of blood flow to help | | | | company is at the time you look at it. The balance |
| ensure long life.Cash Flow is, according to Robert | | | | sheet shows your company's net worth, which in it's |
| Kiyosaki's Rich Dad, "the most important word in the | | | | basic form is income/assets minus expenses/liabilities.If |
| world of money."1 | | | | accounting and numbers aren't your thing, you may |
| Cash Flow management encompasses one of the | | | | want to look into hiring an accountant AND a tax |
| most seemingly-boring subjects in the world of money: | | | | attorney. The tax attorney is useful to help keep you |
| Accounting.Accounting is the collection of principles that | | | | abreast of tax law changes and any tax loopholes |
| concern tracking the flow of money into an out of an | | | | which might improve your tax position. And, a tax |
| organization. Along with accounting come the things | | | | attorney might be typically more effective in the case |
| knows as Financial Statements.Robert Kiyosaki has | | | | of an audit than an accountant. If you find yourself |
| stressed the importance of being able to read Financial | | | | under audit, it also can't hurt to have BOTH of them |
| Statements. If a person gets proficient at reading | | | | present with you.References: 1 "Rich Dad's Guide to |
| Financial Statements, that person is now more | | | | Investing", Robert T. Kiyosaki, with Sharon L. Lechter, |
| equipped to be able to evaluate the fiscal health of a | | | | C.P.A.Up next..."The B-I Triangle (TM) : |
| business before buying stock, or buying the company | | | | Communications"Bill Perry is the creator of the |
| outright. Of equal value is the current business owner | | | | Financial Freedom Library, a collection of articles |
| who knows how to read his own financial | | | | dedicated to helping as many people as possible break |
| statements.The keeping of regular Financial | | | | out of the rat race. |