Cash is King(王), Cash is Kong(杠）

In business, it is a non-disputable fact that “Cash is King (王)”. When cash is synonymous for capital and is the commodity for exchange of goods and services, it is the most important asset for business. Just like cars need fuel (of course with electric vehicles now, electricity replaces fuel), cash is the fuel for business.

It is almost a no-brainer that cash shelters business during downturns or economic uncertainty, gives us a longer runway to solve problems and allows us to act fast and seize any under-valued opportunities. However, “Cash is King” should not be read at face value. In fact, both cash and profit should be given equal weight - while cash gives business the short-term liquidity to operate, sustainable profit decides the business long-term success. Cash is the ultimate result of profit.

What happens if one neglects profit and is lured into the misconception of “Cash is King”? He will be trapped in a vicious cycle of debt. While borrowing relieves the business with immediate cash, the shit hits the fan as soon as repayment is due if a business struggles with low profit or loss. This is an example of increasing leverage (杠杆) for cash - “Cash is Kong (杠 in Cantonese)”.

When you feel good like a king with Cash, be mindful of King Kong - “Cash is King, Cash is Kong”.