Originally posted by IchabodCrane You're adding to my comment as I never said "immediate". For those who are inclined to think that positive cash flow is not highly important in a mature business, I have a hard time coming up with counter-examples.
Agreed. Free Cash Flow is even better (that means there is more unencumbered money at the end of the year than there was at the beginning of the year).
Originally posted by rawr No doubt positive cash-flow helps make M&A decisions a lot easier at any stage.
However I've seen many expensive corporate acquisitions done that have little to do with the solid cash-flow of the target. 'Synergies', 'efficiencies', 'enter new markets', 'growth' are some phrases that spring to mind.
Those words are all investment banker speak for a deal that shouldn't have been done, but management of one or the other company was enriched by doing the deal (at the expense of lenders, employees, shareholders or all three).
GAAP Accounting Earnings are not real money earnings. They're a chimera that companies and investment bankers manipulate to make the 10-K look good.
Pig, here's some lipstick.