When the governing officers or senior leadership of a company wishes to initiate a brand spanking new strategic direction or offer a brand spanking new service or product line, they first – usually – will assess whether the company has the obtainable resources (labour and infrastructure bandwidth, capital and equity, funds flow) to implement and maintain the new direction. You can also get info about finlit.
This analysis might include such market tactics as how risk and earnings contributions are apportioned amongst subsidiaries, or country locations; acceptable tolerance for non-producing product lines or economic circumstances; and above all, meticulously detailed funds flow forecasts extending years in to the future, accompanied by contingency designs and what-if scenarios. While this may sound like an simple first step, tiny private companies – or private entrepreneurs or patent holders – that need to go public may not be accustomed to the same level of financial planning and oversight that public companies utilize on a every day basis. You can also visit http://www.finlit.com/investing to get more info.
CASH FLOW FORECASTING IS IMPORTANT FOR NEW PUBLIC COMPANIES
Understandably, post-Enron market and other capital funding for public companies in the US has been very difficult to get, and public and lender confidence is only slowly returning. This lack of confidence has made it even more advantageous for private companies to go public, The importance of sound financial management and leadership – sound P&L and balance sheet review and oversight – is critical not to that company's profits, but to thousands of families and retirees around the country, whether they are relying on company benefits, or on a sound economy that is supported by each individual company's performance.
Market analysts and shareholders are accustomed to being furnished with regular quarterly and annual financial reporting which documents and validates the sound financial leadership of the company they are reviewing or supporting, through stock or debt contributions. Additional federal reporting standards enforced by the Securities and Exchange Commission (SEC) and the SEC and the Public Company Accounting Oversight Board (PCAOB), are supposed to further protect investors and the US public in general, from the impact of flawed or unethical business financial management. Enron, still fresh in plenty of memories, is of the best-known US harbingers of the negative consequences of excessively inflated valuation coupled with audit failures to adequately scrutinize funds flows. Enron was of several industry leaders which relied on market confidence, reputation and equity valuation – fooling top analyst and audit firms – while ignoring the reality of corporate funds flows and the importance of money equity. Stock valuation and nice will do not pay corporate salaries or operating expenses. Repeatedly, the US market has had to re-learn this lesson.