Profit vs Cash
The distinction between profit (an accounting measure of revenue minus costs over a period) and cash (the actual money a...
Formula
Profit = Revenue − Total Costs
Real World
Lush Cosmetics can report healthy annual profits yet still face cash shortages in January after paying suppliers upfront for Christmas stock before customers' invoice payments arrive.
Exam Focus
Never confuse profit with cash in answers — explicitly state 'profitable but cash-flow negative' to show examiner understanding.
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