Cash flow and income are two important financial metrics for businesses. Cash flow measures the actual amount of money flowing into and out of a business, while income measures the profits that a business generates after all expenses have been deducted.
The difference between cash flow and income can be significant, especially for businesses that sell products or services on credit. A business may have a large amount of income in a given period, but if it hasn’t yet received payment from its customers, it may not have much cash flow.
It’s important for businesses to understand the difference between cash flow and income because cash flow is a better measure of a business’s financial health and ability to grow. Businesses can improve their cash flow by collecting accounts receivable more quickly, managing inventory levels carefully, controlling expenses, and investing in assets that generate cash.
Here are some key points:
By understanding the difference between cash flow and income and taking steps to improve their cash flow, businesses can improve their financial health and position themselves for growth.
Watch the video below:
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The video, hosted by Dave Wilkins from Wolverine Business Solutions, focuses on the importance of building a “moat” around a business, a concept often used by Warren Buffett to describe a company’s competitive advantage or barrier to entry in the market. Wilkins emphasizes that having a deep and wide competitive