BU121 Lecture Notes - Cash Flow, Accounts Payable, Income Statement
Document Summary
Real, human, and financial capital must be "rented" from owners. Risk and expected reward go hand in hand. While accounting is language of business, cash is currency. New venture (private and illiquid- investors can"t easily sell/buy) Dangerous to assume that people act against their own self-interests. Venture character and reputation can be assets or liabilities. Development stage: not yet bringing in revenue, so hard to obtain financing. Startup stage: ready to launch, making a little bit of money, but still not easy to bring in financing. Survival stage: revenues pay some but not all expenses, borrow or give up equity, trying to get into growth stage. Rapid-growth stage: cash inflows > outflows, cash flow is positive, value increases (at the fastest/greatest rate of increase, starting to sustain yourself- industry growth, economies of scale (costs go down) Early-maturity stage: growth slows, most vale realized, consider exit strategies.
