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The UCA format was developed in the 1970s by Wells Fargo Bank and promulgated through the banking industry by Robert Morris Associates (now the Risk Management Association), which operates to exchange both information and insights regarding commercial-lending activity. The problem that bankers were addressing was basically one of movement from stability to nonstability. Better tools were needed to analyze the creditworthiness of borrowers in a more complex world in which the old rules of thumb were no longer reliable.

One of the signal examples of the need for new accounting tools was the W.T. Grant debacle. Long an American retail institution, this huge company had undergone a series of changes in performance, strategy and environmental pressures that created an enormous gap between traditional rule-ofthumb cash flow and true cash flow. The big, prestigious money-center corporate lenders who had a piece of the W.T. Grant debt package were focused on the rule-of-thumb cashflow number and were badly thrown when the company
declared bankruptcy. (Like many things in life, though, bankruptcy can be more or less severe depending on circumstances. Later in this chapter, we will take a look at the two basic types of bankruptcy both as a warning and as another perspective on the centrality of cash-flow management.)