Profit & Cash

Profit & Cash

Understanding the Cash Flow of a business is as essential as understanding Profit.

Profit is like food - you need it for the business to grow and to be healthy and strong; but you don’t have to eat all the time. But cash is like air – you need it constantly. If you run out, and cannot immediately get more, you die.

Profit happens on the Income Statement. Cash happens on the Balance Sheet. The two have to be managed separately.

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