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OK.

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The second principle makes sure you'll always invest in a cash rich business.

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When a business is cash rich It means it always has abundant funds left over after paying all of its

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debts and expenses.

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It also means that its assets are liquid enough to be called upon Should they be needed as an extra

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source of cash.

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So more cash simply means more liquidity.

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That's exactly what you want to look for as a value investor and you should always make a point of investing

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in companies that have a strong cash position because they're the ones most likely to pay regular dividends

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to their shareholders.

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At the same time these companies are less likely to find themselves so strapped for cash that they are

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unable to service their debt loads when revenues dip or recession hits.

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However having a lot of cash is not always a good sign.

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You must find out if the management is utilizing their business casual.

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Warren Buffett once said when people talk about cash being King it's not king if it just sits there

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and never does anything.

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If the management can't utilize their business assets it shows inefficiency in the company's operations

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and that will be a red flag that you need to pay attention to.

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And finally you'll want to look for cash rich businesses with a long and uninterrupted history of dividend

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payments.

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When companies pay dividends on a consistent basis they demonstrate stability and show a positive sign

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that after paying all expenses and debts they still have a lot of cash left to pay dividends to you

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and other shareholders.

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And you know that helps increase shareholder value.

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And in some way contributes to a growth in their stocks perceived value OK.

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That's Principle Number two make sure you'll always invest in a cash rich business.

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So you in the next video.