Whose cash flow pipeline is choked?Whose cash flow pipeline is choked? - Tips for investors to spot companies facing possible money woes Straits Times - October 14, 2008 NEWS that Singapore-listed FerroChina is insolvent has put the spotlight on other China-based firms here which may be hit by the current credit crunch. Analysts say one tell-tale sign of possible money woes ahead would be negative cash flow - where a company spends more than it receives in revenue. These companies tend to rely heavily on credit, which is becoming far more difficult to obtain in the financial crisis. In FerroChina's case, it had, over the past 12 months, seen a cash flow shortfall of 1.57 billion yuan (S$338 million) - so it had no money left to pay dividends and pay off debt. It was rendered insolvent last Thursday after disclosing it was unable to repay part of its working capital loans of 706 million yuan. Some of the most hotly traded China stocks here also have what analysts call negative 'free cash flow'. (more...)