Cash Flow vs Profit: Why It Matters
Businesses often confuse profit with cash flow. Knowing the difference is crucial for sustainability.
Profit
Revenue minus expenses over a period.
Accounting measure of success.
Cash Flow
Actual money entering and leaving the business.
Determines liquidity and ability to pay obligations.
Practical Differences
| Aspect | Profit | Cash Flow |
|---|---|---|
| Definition | Accounting profit | Actual money movement |
| Importance | Shows financial success | Shows ability to survive and pay bills |
| Timing | Over accounting period | Real-time tracking |
