1. (1)The writer would like to thank Professors Reid, Brealey , Lawson and Perrin for their comments on an earlier version of this paper.
2. (2) "Cash-Flow Accounting I & II ,The Accountant, October 28th and November 41971 ; andThe Rationale for Measuring the Cost of Working Capital, Mimeographed, Mancheste Business School, 1974.
3. (3)A Case for Cash-Flow Reporting , Journal of Business Finance , No. 2, Vol. 4, 1972 ; "Goodwill - An Example of Will - O' - the - Wisp Accounting,Accounting and Business Research, Autumn 1971; and "The Relevance of Accounting information Including Cash Flows," The Accountant's Magazine, January 1972.
4. (4)Later in the paper Lawson points out that for given rates of turnover growth and selling price, the operating cash flow of the business will be permanently negative and that the productive activities of the company can only be main-tained at this level be raising additional finance from external sources e.g. long term debt or equity capital . Inthis situation a company could be earning profits on an accural basis and yet have a cash deficit although the the existence would be seriously jeopardised if these external sources of finance dried up.