Cash money are that money which you find in the bank or company. There is always need of cash: to pay salaries, rent, taxes.
A large profit does not mean that there is more cash.
A lesson that all entrepreneurs have to learn the difference between cash and profit. Profit is that money you expect to exist in the organization if all customers pay on time and if properly shared costs for the period. Cash money are those that must always be to ensure smooth business activity, with the ultimate goal of obtaining profits.
In the long term, the profit of a firm may be very small if cash has not a positive level.
The basic rule is: "You can not spend profit spend money!"
Cash-flow refers to the ins and outs of money in the company for a period of time. The management of these inputs and outputs of cash is one of the main tasks of an entrepreneur. Outputs are measured by cash receipts issued when paying salaries, rent and creditors. Entries are that money received from clients, borrowers and investors.
The ratio between cash flow and turnover is an indicator of short-term profitability of a company.
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