Bailouts are welfare for improvident companies that should be subject to the ordinary market discipline. The bailouts are the equivalent of everyone getting an A on their report cards, despite having made an F. How do these failures come about? Here is a very brief primer on cash flow.The timing of cash flows is all-important. Balance sheet values of assets mean a great deal less than balance sheet values of liabilities. Short-term liabilities must be paid. The company has to have cash inflows to pay these outflows and stay alive. The timing of the cash flows is thus very important. … Continue reading Failures and improvident management