Anil Lamba > Quotes

“A Balance Sheet is a static document.
On the other hand, a Funds-Flow Statement spans a period of time.”
― Anil Lamba, Romancing The Balance Sheet

“Successful businesses, therefore, stand on two pillars. Pillar number one: the ability to generate profit. Pillar number two: the ability to effectively manage cash flow.”
― Anil Lamba, Romancing The Balance Sheet

“Depreciation, which appears as an expense on the Profit & Loss Account, is the consumed portion of an expenditure.”
― Anil Lamba, Romancing The Balance Sheet

“Remember: nothing should appear as an expense unless it satisfies the test of consumption.”
― Anil Lamba, Romancing The Balance Sheet

“stock taking is the measurement of what is not consumed”
― Anil Lamba, Romancing The Balance Sheet

“Although while speaking and writing many of us use the words expense and expenditure interchangeably, in accounting they have separate meanings. Expenditure refers to spending, or the outflow of money. We have seen that when money is spent, we either incur an expense or we create an asset.
This makes expenditure broader in scope than expense.
Expenditure encompasses both expenses and assets.
If you thought I had made a loss you probably calculated Profit as Income minus Expenditure instead of Income minus Expense!”
― Anil Lamba, Romancing The Balance Sheet

“The money received has to be separated into Income and Liability. Money spent must be separated into Expense and Asset. And Income less Expense will give us profit.”
― Anil Lamba, Romancing The Balance Sheet

“It follows, therefore, that the greater the credibility that a firm enjoys, the lower would be its net working capital requirement.”
― Anil Lamba, Romancing The Balance Sheet

“Contribution is called Contribution because it is the contribution of each unit sold towards the organization’s bottom line.”
― Anil Lamba, Romancing The Balance Sheet

“Never invest your money without ensuring that the assets you acquire can generate a return which is at least equal to the cost of your capital.”
― Anil Lamba, Romancing The Balance Sheet

“the objective of running a business enterprise to generate profit. But, since profit does not automatically mean money, an equal amount of attention must also be paid to the generation of cash. There is no point in making profit if, at the end of the month, there is no money to pay salaries. Only half the battle has been won when you are able to make profit for your business. The other half will be won if you are also able to generate cash.”
― Anil Lamba, Romancing The Balance Sheet

“Organizations must understand that incomes are sporadic while expenses are continuous.”
― Anil Lamba, Romancing The Balance Sheet

“Never confuse money with profit!
This is yet another common misconception.
Profit and Money are two entirely different things.
It is certainly possible for a firm to make huge profit and have no money. It is equally possible that it is flush with funds but is suffering losses.”
― Anil Lamba, Romancing The Balance Sheet

“Invest your money in such a way that the assets will generate an inflow of funds before the liabilities demand an outflow.”
― Anil Lamba, Romancing The Balance Sheet

“Accounting deals with book-keeping, which is the collecting, recording and presenting of all the financial transactions of the organization.”
― Anil Lamba, Romancing The Balance Sheet

“And money spent on something that is partially consumed, and remains partially unconsumed on the date of the Balance Sheet, to the extent it is consumed is called an expense, and to the extent it is not consumed is called an asset.”
― Anil Lamba, Romancing The Balance Sheet

“A prudent investor gets rid of the junk collected along the way during boom times and starts to pick up under-valued gems during a crash.”
― Anil Lamba, Flirting with Stocks: Stock Market Investing for Beginners

“The first claim on the turnover of 3,000 will be that of Operating Expenses. These get top-most priority. Come the first of the month, salaries and rent must be paid. On the due date, vendors too have to be paid. If we don’t do this, we will be out of business very soon. Let’s assume the Operating Expenses work out to 1,600. That leaves us with 1,400.
This amount is the Operating Profit.”
― Anil Lamba, Romancing The Balance Sheet

“Leverage works both ways. If profit increases at a disproportionately fast pace due to a certain increase in sales, profit will also decline at an equally fast pace if sales decrease.”
― Anil Lamba, Romancing The Balance Sheet

“We are only interested in those sales, at those prices and credit terms, which will generate profit.”
― Anil Lamba, Romancing The Balance Sheet

“It is very important to always keep in mind that business is not about increasing top lines. We are not in business to generate sales. We are in business to generate profit.”
― Anil Lamba, Romancing The Balance Sheet

“the ability to understand the impact of every decision you make on the organization’s profitability, and then to ensure that you take all those actions that will strengthen the bottom line and do nothing that weakens it.
This means that everyone whose actions have the power to affect the bottom line are Finance people.”
― Anil Lamba, Romancing The Balance Sheet

“This is the stage of profit at which we have recovered our Operating Expenses, but have yet to pay taxes to the government, interest to the lenders and dividends to the shareholders.
This figure is also called PBIT (Profit Before Interest and Tax) or EBIT (Earnings Before Interest and Tax).”
― Anil Lamba, Romancing The Balance Sheet

“What really decides whether money spent is an expense or an asset is actually the life of the item being considered.”
― Anil Lamba, Romancing The Balance Sheet

“Often, the gain through market appreciation is far more than the dividend the shareholder would have received.”
― Anil Lamba, Romancing The Balance Sheet

“The validity of this figure is only as on the specific date on which the Balance Sheet is made.”
― Anil Lamba, Romancing The Balance Sheet

“I want you to understand that a salary is not an expense just because it is salary, and a building is not an asset just because it is a building. In fact, it is the life of the item that determines whether it is an expense or an asset. When salary had a long life it appeared as an asset, and when the building had a short life, it was shown as an expense.”
― Anil Lamba, Romancing The Balance Sheet

“An organization that • keeps inventory at a three-month consumption level, • takes one month to convert it to a finished product, • keeps a finished-goods inventory of another one month • and then sells the product on a three-month credit to customers, will have a working-capital cycle of eight months and be able to obtain 1.5 rotations in a year.”
― Anil Lamba, Romancing The Balance Sheet

“A Profit & Loss Account is always prepared for a specified period, whereas a Balance Sheet is at a point of time.”
― Anil Lamba, Romancing The Balance Sheet

“If you break up current assets into those that are liquid and those that are not, the ratio of liquid current assets (LCA) to current liabilities (CL) is called the Quick Ratio.”
― Anil Lamba, Romancing The Balance Sheet