what's the diffference between cash flow and profit ??

Answer 1

Cash flow refers to the amounts of cash coming into and going out of a business while profit is the difference between income and expenses.

These will not be the same because items are often bought and sold on credit and there are many non-cash expenses such as depreciation and amortisation

Answer 2

Cash Flow Vs Profit

Answer 3

All the above are excellent answers.

Cash flow is the amount of money flowing into (or out of) a business. Profit is the amount the business got to keep at the end of an accounting period.

It may be easier to visualise if you think of a business that manufactures something large, like an aeroplane.

If it took 1 year to build and they didn't get paid for it until the end, there would be a large negative cash flow (as they pay for raw materials and the labour costs) up until the point the aeroplane is delivered when the profit would be the amount of money they received for the aeroplane minus the cash flow out.

In large projects there are always careful negotiations over staged payments up front as the supplier tries to get cash flow positive as soon as possible and the customer tries to delay paying as long as possible.

Answer 4

Cash flow is what is coming in and going out; profit (or loss) is what you are left with at the end.

Some examples:

clothes shop: you pay out for the shop and for the clothes; at first the cash flow looks bad but once you have bought the stock for the season then the cashflow gets better as you sell. Only at the end of the season will you know for sure if you have made a profit or a loss.

flower stall: you pay out less for the stall than for a shop but you have to buy and sell your stock each week. Cashflow is constant all year round and your profit will depend on your sales each week.

Answer 5

Cash flow is the actually cash coming into and leaving the company. With out cash a company would become insolvent, so this is the most important to monitor.

Profit is revenue less costs. However, because this can be manipulated it should never be taken at face value. Hence, cash flow is better.

Answer 6

Profit is the gain from business activities and it is calculated as revenues less operating expenses.

Whereas cash flow, takes into account changes in inventory and other balance sheet items such as payables versus receivables, financing activities and investments made by the business. It is calculated as inflows of cash less outflows. Even with a positive net income (i.e. profit), cash flow can be in the negative if a greater amount of cash is used to for operations, financing and investments.

Answer 7

Hello,

Cash flow is the amount of cash or money or funds that your business has available to use on a daily (day to day) basis. It could be called operational or operating funds. Its the money you use to purchase goods or service that your company/business needs inorder to stay trading.

**Profit or operating profit is the amount of money your business or company has left over after all your costs have been deducted or taking into account.

For example your costs were £150 and your sales were £300 therefore your profit after costs =£150.

**NOTE: A business can also make a loss at the end of its trading year or accounting year.

IR

Answer 8

Cash flow is the money that you have coming in to and going out of the business...ie when the business purchases something it is cash flow out. When a customer purchases something from the business it is cashflow in. The profit is what you have left over once you take away all your expenses of running the business, ie the payroll, rent, purchase of goods to sell etc

Answer 9

This is pretty basic, but it's been a while since I took accounting.

Cash flow is the amount of money that goes into a business. For instance, a car dealer may sell ten cars for $10,000 during the month of November, meaning they have a cash flow of $100,000 for November.

However, they had to pay for the property, sales staff, other costs, and the cars themselves. So say each car cost $5,000 to buy, that means they have to take $50,000 from their cash flow, also, they have to spend $25,000 for other costs, which takes an additional amount from their cash flow.

So what you get is $100,000 - $50,000 - $25,000 = $25,000 leftover. This $25,000 is the profit.

Answer 10

Cash flow is money coming into the business and funds paid out - Profit is whats left after the bills have been paid xx