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Will a focus on cash rather than deb. change decision processes? The following extract considers the shifting focus towards the importance of cash flow in

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Will a focus on cash rather than deb. change decision processes? The following extract considers the shifting focus towards the importance of cash flow in considering business success. This month's reporting season is the moment of truth for corporate Australia when it reveals the extent of any damage sustained during the global financial storm. "This is probably the toughest reporting season in decades, " says Fat Prophets founder Angus Geddes. "It's time to pick the wheat from the chaff... the ones to focus on are coping well and will be in a strong position in future." John Price, of Conscious Investor, encourages people to ask if all the indicators point to a business being successful in five years' time ... key indicators to identify the top share investments in these turbulent times include ... Too much debt was a feature behind last year's corporate casualties such as ABC Learning Centres, Alco Finance and Babcock & Brown. "Companies with little or no debt will come out (of the current crisis) stronger, " Price says. He looks for a debt-to-equity ratio of under 50 per cent. Geddes says cash-flow problems are an important sign that a company's financial position is deteriorating. He cites Qantas, which sprung a nasty surprise on investors earlier this month, announcing a $500 million capital raising to pay down debt. "Qantas is one of the best-run airlines in the world but given the state of the global economy the airline market will be among the last to recover, " he says. If cash is the best measure of success, why have the accounting profession and regulators persevered with analyzing debt-to-equity ratios? What do analysts means by the term 'nasty surprise'? Why does the market so readily interpret a cash-flow problem as a sign that a company's financial position might be deteriorating but was apparently prepared to focus on debt-to-equity ratios for a number of years? The article refers to the need to 'sort the wheat from the chaff by focusing on companies that are coping well. How are such judgements made

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