How to avoid Hyflux disasters?

1) Cashflow

2) Debt

3) Working Capital

I was taught to look at companies with minimal debt.

If you're strong and highly profitable. the need for debet is very low.

Hyflux had a monsterous amount of debt.

Hi.! In order to avoid this kind of companies in the future is to have at least some knowledge in accounting. You do not have to be expert in accounting. Just with some basic understanding, you would have find out it is not a good company to invest in. One thing is when you can look at the company debt. Company with huge debt often put themself at the tip of the iceberg. When the debtors asking to payback and the company unable to do so, they will be in a trouble.

Hi Kelly

Adding on my own perspective, which is largely a simpler version of what Ser Jing said.

you treat an investment as though you are picking a future husband / son-in-law (well I assume most people would)

What do you look out for?

• financial security: can he support the family?
  This comes in two ways, good operating cashflow, and making more money than you spend which will look at overall cashflow

Cashflows are the set of numbers that paint the most realistic picture, and it really ties in to common sense.

The net operating cashflow is similar to the amount of money the potential husband saves after paying all the bills. Then where else is it spent?

You can treat investing cashflow as capex, whether you want to think of it as buying a new house, a vacuum cleaner, or maybe a car. Some investments increase your earning potential (eg enhancing your kitchen in a f&b setting), and some are just fancy (like cars).

And financing cashflow is how he manages his debt and money. In the large scheme of things, the key things to note is whether he is paying down the loan, borrowing more, or sometimes giving angpow / dividends to family / shareholders.

Then you can visualize the investment / future husband

• does he earn more than he spends
• is he buying the right things with his "investments"
• can he manage his debt?

The obvious red flags:

• spend more than you make (negative operating cashflow)
• borrow to finance his lifestyle and ending up with more debt.
  This kind of husband u want meh? What if he run away and leave you with the debts?

The other stuff sometimes you frown upon and worry, and its really test your faith

• declining net operating cashflow (which is similar to his pay raise is less than inflation... Dear you need to make more money to buy food)

• impairments / write-offs / disposal losses (which is similar to I told you so that was a lousy investment and waste of cash)

End of day, it can be really simple. You just need to be looking at the right stuff...