Both are equally important to the business. One affects the other. If the cash flow is negative, which means more borrowed working capital, whose interest payments will affect the bottom line [profit]. If the profit margin is not sufficient to sustain the business operation, it means there will be less cash flow, which means more borrowed working capital, whose interest payments will affect the bottom line [profit]. Cash flow needs close monitoring, periodically, say weekly. Profit needs monitoring, say, monthly.
CASH FLOW
Cash flow is the summary statement that shows:
- Money receipts by the organization
- Money payments by the organization
- If the total receipts are greater than the total payments, then cash flow is positive.
- If the total receipts are less than the total payments, then cash flow is negative.
Regards,
Leo Lingham
From India, Mumbai
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270CASH FLOW
Cash flow is the summary statement that shows:
- Money receipts by the organization
- Money payments by the organization
- If the total receipts are greater than the total payments, then cash flow is positive.
- If the total receipts are less than the total payments, then cash flow is negative.
Regards,
Leo Lingham
From India, Mumbai
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