Motley Fool Research Reports often refer to these metrics, but unless you're a devotee of the Rule Maker Portfolio , you may not know what they mean. The Rule Makers are here to teach you all about how we evaluate companies the Rule Maker way. In the Rule Maker corner of Fooldom, our philosophical approach to investing is grounded upon the importance of cash.
Cash is a company's lifeblood.
Activities like these grow the value of your investment in a company. Invested prudently, cash begets more cash. This week, we'll take a look at cash conservation using the Flow Ratio. We measure cash conservation through a simple tool called the Flow Ratio. Developed by Tom Gardner, the Flow Ratio tells us how well a company is managing its working capital, or its current assets and current liabilities, as they're referred to on the balance sheet.