Cash Flow 3.0 introduces cutting-edge advances in cash flow analysis and cash flow lending. Bold statement? Consider this: Traditional analysis says that AT&T is illiquid because it reports a multi-billion dollar negative working capital. Yet AT&T pays it trade creditors every year and is rewarded with top credit ratings. Clearly there is a flaw in our traditional measures of liquidity. Small and Medium Enterprises (SMEs) are not as fortunate as AT&T. Banks routinely-and erroneously-deny credit to SMEs that report a negative working capital, a flawed sign of illiquidity. The flaw was first made public in April 2012 in the Journal of Accountancy: there is an account missing from the balance sheet The missing account-the Current Portion of Fixed Assets (CPFA)-is one of several discoveries that emerges from a new framework that views cash flow in terms of sustainable cycles. Better Credit: Cash Flow 3.0 sharpens the measurements of debt repayment by pinpointing the cash flow that should repay a loan within its natural cycle (new primary coverage ratios). In contrast, "hybrid ratios" like the traditional long-term debt service coverage ratio (DSCR) and the flawed current ratio include cash that flows from other cycles. Cross-cycle cash flow explains how AT&T pays its creditors despite a multi-billion dollar negative working capital (cross-cycle repayment), and answers old questions like, "Can a term loan be made to finance a permanent increase in working capital?" (cross-cycle financing). Better Sales: Viewing cash flow in terms of natural cycles is so logic, so intuitive, that it enables lenders to discuss (and sell) a "strategy for financing growth" with SME clients in the field. More about the book: www.sme-lending.com