Cash and cash flow - AQAThe difference between cash and profit
The management of cash and cash flow is important as it can prevent a business from failing. Cash flow is the way that money moves in and out of a business and its bank accounts.
Not all cash paid into a business is profitsThe amount of money made after all costs are deducted.. A business must pay its costs from the money that comes into it. Once all costs have been deducted from all revenueThe income earned by a business over a period of time from selling its goods or services., the amount that is left is the business’ profit.
Profit is usually calculated on an annualEvery year. basis. However, calculating it monthly can help a business by showing that it is solventThe ability to meet day-to-day expenditure and repay debts. and indicating whether it will be able to achieve its profit targets.
