Guide to Analysing Companies

CARs
Short for Certificate for Automobile Receivables (see asset-
backed securities).
Carve-out
See equity carve-out.
Cash
Ready money; not just notes and coins but also liquid assets
that can readily be turned into notes and coins without loss. In
a company’s financial statement, cash is usually grouped with
cash equivalents, which are highly liquid securities with a
known value and maturity. The demand for cash varies
throughout the year, being strongest, for example, in Christian
countries at Christmas time, or at Chinese New Year in China
and parts of Asia.
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Cash flow
The amount of money flowing through an organisation (or,
indeed, an individual) in a given period. For a company, cash
flow is the sum of its net borrowings plus money from any
share issues, plus its trading profit, plus any deprecia-
tion. A cash flow statement, sometimes also called a funds
flow statement, shows how a company balances the flows of
cash in and out of its business. Cash flow and profits are two
different things. A company can be recording rising profits year
by year while its cash is ebbing away, particularly if it is unable
to get in the money owed by its debtors. Alternatively, a
company may be cash rich but making little or no profits.
Profit is an illusion, cash flow is fact.
Anon
Cash machine
See automatic teller machine.
Cash market
See spot price.
Cash on delivery
Commonly known as cod, cash on delivery refers to goods
and services that must be paid for in full at the time that they
are handed over to the buyer. In the United States, the term is
“collect on delivery”.