If a business yearly gross income is $105,000. Its yearly cash flow is $55,000. Does is make $55,000 profit?

Question

I am unsure what cash flow means... can someone help me. I think that would mean the company makes $55,000 a year profit but correct me if I am wrong.

Answer 1

Cash flow means money flowing in and out of your business, whether cash, check or from credit card processing that are direct deposit into your bank account.

SBA (Small Business Administration) has a really good simple Cash Flow Statement to help you understand. Go to http://www.sba.gov/library/incstmt.xls.

So the answer to your question is No. Cash flow doesn't mean profit. To get profit you will need to take all income and substract all expenses.

Answer 2

Cash Flow does not mean Profit. Profit means Gross Income less all operating expenses. Cash flow means total amount cash/Checks u received during the specific period and that you spent. Cash Inflow and Outflow