Cash is King- Make sure you monitor it!


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Whether you run a  private company or an investor in the stock market- you should know that operating cash flow (OCF) is the lifeblood of the company.  While investors and business owners often consider net income as their key indicator, OCF is a much better choice to monitor the enterprise’s financial health.  Why?  Because OCF is a little harder to manipulate (but, of course, it can be done).  Secondly, without cash, the company dies.

Here’s where the definition is key…OCF is the cash flow provided from operations, it is different from EBITDA (earnings before interest, taxes, depreciation, and amortization).  It is defined as EBIT (obviously, earnings before interest and taxes) + Depreciation – Taxes.  (OCF= EBIT + Depreciation – Taxes.) EBITDA can be affected by financing and capital investment decisions;  OCF will not. OCF is strictly a function of net income and changes to working capital (i.e., current assets-current liabilities).

[There are two other cash flows which are not discussed today:  Investment cash flow (net cash resulting from capital expenditures, investments, and acquisitions) and financing cash flow (net cash due to raising cash to fund other flows or repay debt). ]

This is where the differences between accrual and cash accounting become obvious.  Assuming you were on accrual accounting, you use cash to produce (manufacture or acquire) inventory.  When that inventory is sold, you create an account receivable (unless you customers pay you immediately upon delivery; usually not true). When your customer pays your account receivable (decreasing it), you develop cash.  So, if you are building up inventory, you have less cash.  If you customers pay you slowly, you have augmented receivables and less cash.

If a company is public (or about to become so), there are many opportunities to seemingly increase net income.  (This is done to increase the stock price or for executives to earn bigger bonuses, which are typically tied to net income and/or stock prices.)  One of the more common “cheats” is when the company provides the retailer with extended payment terms and/or a promise to take back the inventory if it doesn’t sell. This process books sales and increases accrued earnings (with NO changes to the company’s cash).  This actually steals sales from one or two quarters hence- which is how companies tend to look good for short-term periods (and then fall apart).

The key point is when operating cash flow is much smaller than net income, there is something wrong. One should examine the inventory levels and receivables to determine if this is a short- or long- term issue.

You will recall I said you can manipulate OCF, too.  One of the ways to do so has been rampant during this Great Recession- payments get delayed to suppliers.  This means there is an increase to the accounts payable, as well as to cash (since it has not been spent).  Another approach (this is often used in the health care industry) is to restructure the reserves for the firm (cash held for self-insured portions of malpractice or other purposes).

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Handwriting Counts- Our Brain Knows It!!!

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I learned how to “script” at a very early age.  My great-grandfather was a calligrapher; and I was lucky enough to have wonderful training.  Of course, when I went to elementary school, my teachers were not all that thrilled, since there was this rule about “printing first”, but, rest assured, this was not the only problem I had with teachers and their rules of learning. To this day, I love writing with a fountain pen- which is one of the best ways (at least to me) to express yourself.  But, it turns out, that handwriting skills are critical for our development. (There is some discussion that handwriting is a useful cognitive skill to keep one mind’s sharp and other physicians believe that handwriting can provide a diagnostic for neurological disorders.)

Karin Harman James at Indiana University has been studying what effects teaching toddlers handwriting have on the brain.  Results were presented in Developmental Science (March 2010) that demonstrated enhanced neural activity.  James presented letters to the children before and after providing handwriting training, while monitoring their brain activity with fMRI. These images, which depict enhanced brain activity, indicate that learning occurred.

Dr. James (and Atwood) published results that demonstrated similar effects when adults are trained in graphically different languages (Chinese, mathematic symbols, music).  In that study, the adults were asked to examine characters and their mirror images via handwriting and computers.  When handwriting was involved, recognition was quicker than via computer input.

Virginia Berninger of  the University of Washington found that handwriting is different from typing, when it comes to the brain.  Handwriting requires sequential events to form a letter; typing involves key selection only. Imaging indicates that more of the brain is involved when the sequential finger movements are required.

The fMRI imaging prove that handwriting (or calligraphy) is more than communication; it improves idea development and expression, as well as augments fine motor-skill development.

So, stay sharp.   Bring out those fountain pens and practice!

You can see an example of my great-grandfather’s copyrighted material (he etched the faces of Washington, Lincoln, and Jefferson into the Declaration of Independence and the Constitution, among other items) here.

If this has inspired you, check out some of these sites:,,

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Aging and Depression


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Are you outgoing?  Friendly?  Should you become depressed as you age, the odds are no-one will notice. This fact is more critical, because as found by Drs. Lyness and Duberstein, if one has neurotic tendencies when faced with increased medical burdens, one is more likely to experience greater depression.   We already know that our mental attitude affects our ability to withstand disease, so diagnosis and treatment of depression becomes important.

Depression among seniors has different manifestations, than when one is younger.  Younger dejected patients manifest expressions of sadness routinely; these tendencies are depressed among seniors.  When friends and family can identify depression, treatment can be provided sooner- and more effectively. This becomes more of an issue with older people, where we have developed our expectations of their fun-loving ways over the years.   Older patients tend to discuss their health concerns with friends and family, and the troupe normally accompanies them during physician appointments.  Physicians rely on those accompanyists to help identify the at-risk patients. These results were published by Dr. Duberstein et. al.  of the University of Rochester Medical Center.

Originally, the research was focused upon patients that were introverted (the study involved 191 subjects, aged 60 or over); those were the ones they expected to have had missed diagnoses.  However, they found the opposite: patients that were characterized as agreeable, trusting, altruistic, or conformist were the ones where the diagnosis was usually missed.

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Let’s Get Moving- Exercise is critical for health AND disease therapy

We still live in an age where we expect instant cures- a pill or a shot NOW to fix our ailments.  Yet, we overeat and live flaccid lives- which make us more susceptible to diseases.  Recently, the government has suggested that we need 150 minutes of exercise a week and to give up sugary drinks.  Not only does that work to reduce our girth- but data are now showing that exercise is critical to preclude- and improve-  the treatment and rehabilitation of devastating diseases. We have known for years that exercise is a critical regimen in the treatment of cardiac patients. Many asthmatics have proven that swimming precludes attacks and alleviates symptoms.  We can now expand the use of exercise to cancer, autoimmune diseases, Parkinson’s disease, and, even, dialysis patients.

We used to limit breast cancer survivors to lifting less than 15 pounds.  Dr. Schmitz (University of Pennsylvania) and her research group have shown that slow, progressive weight lifting is not only safe, but beneficial. With their compromised lymphatic systems, localized fluid retention and tissue swelling (lymphedema) flared occasionally; this regimen precluded such flare-ups.  The exercise may also reduce recurrence by some 40% (however, this part of the data needs more study).

Dr. Comella (Rush University Medical Center) has been involved with Parkinson’s Disease studies for years.  She has now found (animal studies) that exercise can slow the process of cellular


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loss associated with Parkinson’s; exercise helps with neuroplasticity and the ability of the brain to repair itself. It seems that exercise stimulates dopamine synthesis (reducing symptoms) and causes the release of neurotrophic factors and augments cerebral oxygenation that promotes cell growth and survival.  Her studies will now progress to humans; personal trainers will be used to improve patient participation.

Dr. Wilund of the University of Illinois (Urbanna-Champaign) is conducting a study with dialysis patients in Champaign and Chicago (both sites of U of I campuses).  With a more than $ 2 million NIH grant, he will lead the study to determine if bicycling (with some protein supplements) during dialysis therapy helps.  The anemic dialysis patients, who suffer from a loss of muscle tissue, will be studied to see if this regimen reverses such trends.  (Dialysis does remove amino acids [unintended circumstances, again], which is why protein supplements are part of the regimen.] The research will also see if vascular calcification will be reversed (blood vessel constriction and dilation affects blood pressure; blood pressure control is important in dialysis).  Part of this study will include personal trainers to induce the patients to use the modified bicycle units.

Exercise is able to work at both the physical and emotional levels; it has been found to reduce aggression and perfectionist tendencies.  But, the real trick in getting it to work is to choose specific goals (improve blood pressure, reduce blood sugar by 10 points) and employing a personal trainer to keep the patient (or us) on track.  Studies as to the mode and duration of exercise are critical, too. Many physicians have been leery of providing a stressor to the body during life-threatening illnesses.  However, as you can see, the data clearly indicates that the avoidance of inactivity is essential.  Let’s get moving…

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Laser Probes Being Developed for Early Detection of Cancer, Osteoporosis, and Dental Caries


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Light scattering from laser probes (fiber optics) are being developed as diagnostic tools to differentiate between healthy and diseased cells.   These tools would be a (safer) replacement for the ubiquitous x-ray machines that have been used; moreover, the device provides more accurate information at a lower cost.  Preliminary results for a variety of diseases were presented at this year’s International Conference on Raman Spectroscopy (ICORS).

Raman Spectroscopy (RS) measures the changes in wavelength and intensity from the laser probe, after it becomes scattered from the target. The positive attribute of RS is that sample preparation is not required (nor is it an invasive technique); the negative aspect is that RS is not particularly sensitive.  However, RS can detect changes in cell composition, due to illness or cancer, as compared to their healthy state; those changes alter the spectrum results.

Researchers at the University of Michigan (under the direction of Dr. Michael Morris) found that RS is particularly effective for bone analysis (osteoporosis); the minerals within the bone provide clearly distinguishable Raman bands, which differ according to age, diet, degree of loading and exercise, as well as disease. RS is capable of predicting susceptibility to fracture and the effectiveness of a therapeutic regimen.  Currently, X-ray systems are used to predict therapeutic outcomes with moderate success; RS would greatly surpass this as a predictor.

Research groups from Rutherford Appleton Laboratory and Gloucestershire Royal Hospital (both in the UK) have employed RS to determine breast tissue calcification.  As is true for bone, the calcifications are primarily deposits of hydroxyapatite.  The calcifications are what is observed in positive mammograms.  Other research groups in Singapore and at Vanderbilt University are examining the use of RS for stomach and cervical cancers (as opposed to Pap smears), respectively).

Tooth decay (dental caries) was the target for  Dr. Choo-Smith at Canada’s National Research Council (Winnipeg) research.  As with bone, the primary component of teeth is hydroxyapatite, which has that strong Raman band.  Tooth decay involves the acid leaching (by Streptococcus mutans and others) of the minerals. Very small decay pits (100 to 250 μm) can be detected; in these cases sealants or antimicrobial treatments would be viable as opposed to drill and fill techniques that we commonly employ now.  The researchers hope to begin work with live subjects very shortly.

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New Method to Produce Pluripotent Stem Cells- quicker and more efficiently.


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Dr. Derrick J. Rossi (Children’s Hospital Boston) along with a team of researchers from Children’s, Harvard, MIT, and Boston University, published  results in Cell demonstrating that skin cells can be reprogrammed into stem cells that seem virtually identical to embryonic ones.  These cells can also be used to develop transplant organs. While very exciting, the issue is that we have found that iPS (induced Pluripotent Stem) cells are not totally identical to embryonic ones; the cells seem to retain some memory of their tissue of origin.

Instead of using viri to manipulate the cell back to its embryonic capabilities, messenger RNA (mRNA) was inserted to effect the conversion; an interferon inhibitor was also employed.  The mRNA are involved in transcription (the formation of RNA from the DNA template) and translation (the formation of proteins); these conversions occurs in ribosomes among the cytoplasm.  In this case, the mRNA are involved in the translation of four key proteins (genes) that reprogram the cells into the iPS state.  The time frame involved is about 17 days from start to finish (about ½ the time for the viral method) and this process produces some 50-100 times more iPS cells.

Studies were done to see if differences between these iPS and embryonic cells would be easily manifested.  However, none were readily found.  In addition, the cells have been converted into cardiomyocetes (heart muscle cells) from their stem cell state.

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We are not crazy- overheard cell phone conversations are VERY distracting

I spend most mornings before visiting with clients at St. Elmo’s (my local coffee shop). Besides reading the paper and discussing politics with friends (and, of course, the coffee), what I like most about St. Elmo’s is its firm NO CELLPHONE POLICY.  I am sure you, too, feel that overheard cell phone conversations are very distracting.  Well, Lauren Embersen, while she was an undergraduate at the University of British Columbia, thought so, too.  The difference is that she performed the research to find out why  (for her Ph.D. at Cornell University).  The study results (co-authors are Michael Goldstein [Cornell University], Michael Spivey [University of California at Merced] and Gary Lupyan [University of Wisconsin-Madison]) are published in Psychological Science (September 2010; one needs to be a subscriber to read the document).  It turns out hearing half a conversation is much more distracting than hearing the entire discourse.

Ms. Embersen recording two pairs of female roommates holding a cell conversation- as a dialogue (both sides heard) and a “halfalogue” (only one side of the conversation could be

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heard, i.e., a simulated overheard cell phone conversation).  A monologue version (one person recapping the conversation) was also recorded.

These recordings were then played for 24 volunteers at modulating volumes (and silence,

as the control), who performed two different tasks on a computer.  One test involved tracking a moving dot on the monitor with the

mouse.  The other test required them to push a button whenever they saw four specific letters flash on the monitor.  The volunteers were requested to ignore the sounds and just concentrate on the assignment.

Performance (missed responses, incorrect hits) was the worst when the “halfalogue” was heard.  Overhearing the dialogue provided a six-fold response for the moving dot test when compared to the “halfalogue”.  The letter response test performance dropped 10% during the “halfalogue” (when compared to the dialogue, silence, or monologues).  The “halfalogues” were also adjusted to sound muffled (as if underwater) to test if the acoustic characteristics of the voice affected performance (and not the unpredictability); there was no significant effect.

Ms. Embersen postulates that our brains tend to ignore predictable items, but pays closer attention to those items that are not predictable.  A dialogue flows predictably, so we tend to ignore it.  However, overheard cell conversations, with varying bursts of noise and silence, are much less predictable to our brains.

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