Why Cash Is King 👑

When we do a business valuation, the most important item isn’t revenue nor profit.

It’s the cash.

Because at the end of the day, a company survives on cash — not accounting entries.

Revenue can be recorded…
but the cash might not come in yet.

Expenses can be booked…
but the payment may not have gone out.

Profit looks good on paper.
Cash keeps the lights on.

A business must be able to:
• Collect cash from customers
• Pay suppliers and employees
• Service its debt
• Reinvest to grow

That’s why valuation models focus on free cash flow — the real cash left after operating and investing activities.

Of course, profitability matters.
But profit must eventually turn into cash.

If it doesn’t…
the value isn’t really there.

This is also why, during a business valuation process, a lot of time is spent on understand the working capital movements, capex needs, and debt repayment structure — not just the income statement.

Because value comes from cash you can actually take out of the business.

#ORNA #BusinessValuation #DCF