Quick Finance Tip - Use or Source of Cash

We included the following piece in a Finance Essentials Article. However, we feel we should continually highlight this concept, given its ubiquity. ​When we hear a use of cash, it is simply telling us a decrease in the amount of our cash; while a source of cash is an increase in the amount of our cash. Use the following as a rule of thumb: 

1. Increase in assets is a use of cash (i.e. purchasing more inventories)
2. Increase in liabilities is a source of cash (i.e. purchasing more long-term debt for cash)
3. Increase in equity is a source of cash (i.e. selling common stock for cash)
4. Decrease in assets is a source of cash (i.e. decrease in accounts receivable and receiving cash)
5. Decrease in liabilities is a use of cash (i.e. paying back the principle of a corporate bond)
6. Decrease in equity is a use of cash (i.e. repurchasing treasury stock for cash)