This is why some analysts downplay reported profit figures and focus instead on cashflow - which is the measure of money going into and coming out of the business. Some analysts argue that this offers a more meaningful measure of the performance of the business.

If a company has a positive cashflow, it means that it has cash available to invest in the business and pay dividends. If it has negative cashflow, it needs to borrow money to keep the business going - a bit like running up an overdraft to maintain your standard of living. Most company reports contain a cashflow statement in the annual report.

Always be aware of the cashflow position of a company. For example, it is possible with some accounting practices, for a company to be profitable but have negative cashflow. Negative cashflow can kill profitable companies - and it can easily kill start-ups.

High-growth companies typically have negative cashflow in the early stages to see them through the start-up period and product development. Under-funded start-ups are highly risky investments - especially if market sentiment turns against them.