Cash

I was reading, I believe, Businessweek on a recent weekend trip to Connecticut and I highlighted an interview that Maria Bartiromo did with Carlos Ghosn, CEO of Renault, France and Nissan of Japan.

There was one question she asked the CEO and his answer, to me, could be applied to almost any small or large business that is having some challenges on account of this cruel economy. The question was, "What must a car maker do to survive and prosper?"

The CEO answered: "First, you need to [weather] the next two years. That's a basic condition. To get through them, you have to make sure you have a positive free cash flow. Or to put it another way, avoid burning cash that's very fundamental. You must be able to still generate cash, even with a market as treacherous as the one we'll be facing.

There is an end to any crisis and this one is no exception. There will be an end. And you want to be ready. You want to have innovative products and strong fundamentals, a team that believes in the brand and believes the company will be ready to fight again. I don't think everybody is going to make it through this period of time, but those who survive will have a boulevard in front of them because people will still need to buy cars."

I thought this answer was quite brilliant, given that all indications are that cash is still king. What do you think? Is he right? And how is your cash flow situation? Are you generating enough of it?