Business Management
- Basics for Entrepreneurs

Revised 10 November 2026

Key words: Logic first in business studies, Business Management, Business Analyses, Liquidity, Cash flows, Cash flow 1, Cash flow 2, Cashflow 3, BayWa Group analysis, IFRS 18, Cash flow statement, Costs-Benefits, Contribution Margin, Business Planning, Liquidity Planning, Double-entry accounting without debit/credit

Why this website ?

My aim is to present business performance figures in a way that is easy for entrepreneurs, supervisory board members, students, and other interested parties to understand.

Using the same terms in business analysis and planning breaks down barriers.

Profitability, liquidity and stability are at the core of every business. I hope to convince you that there are topics related to it that your textbooks don't cover.

- Gross cash surplus: There is an appropriate profit and loss model which shows it.
- Ordinary profit: Making adjustments while walking through the financial statement.
- Periodic liquidity: The cash flows 1-3 are fundamental, closest to accountancy.
- Variable and full costs: Use the 'company allocation sheet' or just the projections?
- Liquidity planning: The 'Extended Cash flow 3' includes extraordinary payments.
- Planning of target alternatives or planning year-after-year: Switching is an option.
- Double-entry theory: Plus and minus are enough, just like everywhere else - due to digitisation.

Other authors in the field of business management write about ideas, market opportunities, team guidance and so on. That's good. However, let us also look for performance indicators. Let's also search for time-saving analysis and programming.

The principle should be 'logic first'! In business management, however, you often encounter 'standards first' (e.g. IFRS 18 and commercial laws), 'conventions first' (e.g. debit/credit), or 'those who cry loudest first' (e.g. search engines).

There are two main themes

1. The concept of 'self-financing capacity' is widely used. It is similar to the cascade of cash flow 1–3. These concepts can serve entrepreneurs, supervisory boards and advisory experts directly. My analysis of the BayWa Group raises a question: The supervisory board did not have a clear view of the situation. Were the indicators misleading?

2. Once digitisation has been accepted, the basic principles of accounting can be easily explained. I present a 'double-entry table'. With prepared examples, it may take around two hours to teach the theory of double-entry bookkeeping. You are welcome to adapt this Excel spreadsheet for use in your own language and sector.

The bridge between accounting and cash flows

As longtime known, bookkeeping can be based on the four classes of accounts.
The cascade of cash flows 1–3, together with depreciation as a metric, has four steps. That fits together.

 Profit accounts        
→ Gross cash surplus  → Cash flow 1
Private accounts     
→ Adjusted deposits/withdrawals → Cash flow 2
Financial accounts 
→ Sustainable repayments → Cash flow 3
Tangible asset accounts
→ Depreciation as a benchmark of Cash flow 3

In this framework, Cash Flow 3 represents self-financing capacity (in French: capacité d'autofinancement), the ‘cash flow for financing investments’. The cash flow cascade 1-3 has been known in the agricultural sector in German-speaking countries for more than 35 years. The logic is broader, however. In any business (and even in any household), you should ask: does it generate enough cash, can it meet its obligations, and can it reinvest without undermining stability?

Cash flow 3 and its benchmark were used to analyse the financial difficulties of the German BayWa Group. Question : Did their supervisory board receive the appropriate information? One section of this website then deals with IFRS 18.

The following sources do not all present the same approach. They are included here because they address related questions: self-financing capacity, accounting education, and the role of debit and credit in a digital environment. They demonstrate: I am not alone !

Global Voices on Cash flow & IFRS 18

Global Voices on Digital Accounting

Theory researchers and practitioners worldwide question the necessity of teaching debit/credit and propose modern, digital approaches:

For more information on the basics, indicators and examples relating to profitability, stability, benefits and costs, planning and accounting theory, please see:

The section 9.2 of that file includes the debit/credit convention with 'T-accounts', etc. There is even a section on German commercial law (HGB) relating to bookkeeping.

Some very important terms in Business Management

Contents
• Why this website?
• About the author
• The core : Profitability. Liquidity. Stability
• Gross Cash Surplus -> Equity
     - Gross Cash Surplus -> Profit
     - Profit -> Ordinary Profit
     - Equity -> Adjusted Equity
• Some core indicators
  Liquidity: Explaining Cash flows
     - Cashflow 1-3: Closest to accountancy
     - Comparison with other cash flows systems for analysis and planning
• BayWa Group analysis and IFRS 18

• Controlling. Costs-Benefits-Analysis. Contribution Margins
• Business Planning
    - Liquidity planning with 'Extended Cash Flow 3'
    - Target alternatives vs. year-after-year
• Double-entry Accounting: Coding. Bridge to Cash Flow 1-3. Theory with Double-entry Table
• Legal notice and Declarations