Cash - When it's NOT What it Seems
10 Ways Cash May not be Worth its Balance Sheet Value
Cash should be the most simple line on the balance sheet. For many companies, indeed it is. But in this course, we explore when cash in the balance sheet is not available to shareholders and where some discount may need to be factored into the valuation.
We highlight 10 cases where investors need to take care when interpreting cash balances. We flag up some red flags to watch for, such as a company which supposedly has large cash balances on its balance sheet yet intends to make small acquisitions for equity. This was one of several red flags at Patisserie Valerie, a recent fraud in the UK, for example.
This course is not, however, primarily concerned with fraud. It highlights areas where investors need to pay close attention to the accounts, and sometimes to external factors like exchange rates in order to assess the valuation of a business accurately. It's easy to overpay for a stock if you have not identified that the cash does not entirely belong to shareholders!
This course has 25 minutes of videos, some quizzes and an exercise whose answer may surprise and indeed amuse you. It also has some additional reading which relate to using cash in valuations and issues around cash flow.
This course will familiarise you with the numerous ways cash in the balance sheet can mislead,and help you analyse and value companies more accurately.
Your Instructor
Stephen (Steve) Clapham has 30 years of stockmarket experience as an equity analyst. He had a successful career as a highly rated sell-side analyst covering a number of sectors. He then moved to become a partner and head of research at two multi-billion hedge funds, based in London.
In 2018, Steve set up his training company, Behind the Balance Sheet, and hundreds of professional investors, regulators and corporate analysts have taken his Forensic Accounting Course. Some of the world's top institutions rely on Steve to help their top analysts improve their skills. That expertise is now available to you!
In 2020, Steve's first book, The Smart Money Method, How to Invest Like a Hedge Fund Pro, was published by Harriman House and immediately went to the number 1 slot in various Investing categories on Amazon in the UK and US. It has been enthusiastically received by investors, both professional and amateur.