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
Deliveroo reported accounting profits yet faced severe cash shortages in 2022 because restaurants were paid quickly while customers paid on credit, leaving insufficient cash to cover daily operations.
Exam Focus
Always distinguish cash flow from profit in 'analyse' questions — examiners penalise conflating the two concepts.
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