Profit/CashFor the financial layman, there is probably no difference between these 2 terms. But nothing is farther from the truth! Understanding the difference between profit and cash is one of the first things a beginner should master if he wants to slip in his financial word.
Profits are a health indicator. For a particular period, the
profit figure indicates how healthy a company's activity really is.
To calculate the profit, both income and charges are mapped.
Profits = Income - Charges
Cash is the money a company has in its bank account and in cash.
The money in cash becomes less significant though, as most
companies have most of their money going through the bank.
Cash = Cash in - Cash out
There can be important differences between profits and cash. What do you think is the impact of the amount in each problem? Will profits go up or down? Or does the event have an effect on the company's cash? To make things somewhat easier, you do not need to take VAT into account.
