With all of this emphasis on cash flow, you may well wonder about other tests, measures and signs of an
organization’s well-being. Should you disregard more traditional methods of analysis and consider only cash flow? Certainly not. Profitability is still important. How efficiently you utilize your assets needs to be addressed. Questions of leverage regarding how well you use your funds still need to be answered. And clearly, of course, you must be intensely concerned about liquidity in order to quantify the ability to meet short-term financial obligations. These four traditional categories for general financial evaluation—which can be conveniently remembered using the acronym PELL for Profitability, Efficiency, Leverage and Liquidity—all also have cash-flow implications.