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7.2.4 Cash Flow

You may fulfill current responsibilities, such as paying staff and buying raw materials, while simultaneously accumulating a reserve for investments and emergencies with a steady cash flow. Even while accumulating assets like merchandise or real estate is beneficial, your firm will stagnate if cash flow is a problem.

You may find out how much cash is coming into and leaving your company by performing a formal cash flow study. This information enables you to make appropriate plans. By performing these studies on a regular basis, you will obtain historical perspective and be able to calculate how much money you should set aside as reserves in case of a sudden cash flow shortage or leaner months.