FDIC Quarterly Banking Profile ...
Welcome to the NorthStar Banking Advisors Blog and Resources Page. Here you will find articles and resources on risk management, cash flow, banking relationships and trends in the banking industry.
Preparing for a Slowing Business Cycle
Let the Good Times Roll (Over)!
A recovering economy, ultra low interest rates, a vibrant stock market, and rapidly escalating home values has prompted high inflation, a rising rate environment, and the threat of a potential recession. Add to that the global unrest, and we have a recipe for the perfect storm.
Sounds a lot like 2006, doesn’t it? And we all know how that unfolded.
Cash Flow vs. Earnings…What’s the Difference? (Part 2 of 2)
This is Part 2 of a two-part series on Cash Flow vs. Earnings. Part II focuses on the impact on cash of the business operations, driven by operating expenses from the income statement, and changes in related accounts from the balance sheet.
The table below shows how operating expenses are transferred directly from the income statement to the Operating Activities table in the UCA Cash Flow statement. Changes in balance sheet accounts (such as Other Receivables, Accruals, etc.) are calculated and input in this section as well. As described earlier, decreases in asset accounts and increases in liability accounts are considered sources of cash (input as a positive number), while increases in asset accounts and decreases in liability accounts are considered uses of cash (input as a negative number).
Cash Flow vs. Earnings…What’s the Difference? (Part 1 of 2)
This is Part 1 of a two-part series examining the difference between earnings shown on the income statement, and actual cash flow generated from the total business operation during the accounting period.
Yes, there is a difference between your business cash flow and earnings (EBITDA, or net income). The difference typically arises when a business buys or sells on credit, and the financial statements are presented on an accrual basis (rather than a cash basis). Growing businesses that sell their goods or services on a credit (receivables) basis, and buy their materials on a payables basis, will likely see a larger difference between its cash flow and earnings. Why? Because increasing revenues and positive earnings do not necessarily translate to an increase in cash.
Banking Relationships – Falling in Love Again
Do you feel like your relationship with your bank (and banker) is in a lull? Maybe your banker has become distant, they don’t come to visit, or you only hear from them when there’s a problem. You haven’t been invited out to lunch or to play golf in well over a year. If you do get a call, it usually involves your financial statements, which prompts a battery of technical questions about your business and/or your financial performance. And this is coming from the bank you’ve been with for years. It sure seemed like your bank loved you when they extended your loan, but now it feels like your relationship has faded. What’s the problem?