This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Understanding the Cash Flow of a business is as essential as understanding Profit.
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Income|Outcome Learning 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 Flow happens on the Balance Sheet. |
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.