Cash Flow Calculator
Profit isn't the same as cash. This calculator helps you understand the flow of actual money into and out of your business over a period (e.g., a month or quarter) to ensure you have the cash on hand to operate.
Cash Inflows
Cash Outflows
Cash Flow Summary
Profit vs. Cash Flow
Many people use the terms profit and cash flow interchangeably, but in business and finance, they are not the same. Understanding the difference between the two is crucial for long-term success.
Profit (also called net income) is the amount left after subtracting all expenses from revenue. However, profit is an accounting measure, and it often includes non-cash items such as depreciation, amortization, or changes in inventory value. Profit shows whether your business is generating value on paper, but it does not guarantee that money is actually available to spend.
Cash Flow, on the other hand, represents the actual inflows and outflows of money in your business bank account. It reflects your ability to pay bills, cover payroll, invest in growth, and manage debt. Positive cash flow means your business has enough liquidity to operate smoothly, while negative cash flow can create serious problems—even if your company is technically profitable.
This distinction is why many businesses that report profits on their financial statements still struggle or fail: without sufficient cash on hand, they cannot meet day-to-day obligations.
Frequently Asked Questions
Can a company be profitable but still have cash flow problems?
Yes. A business might show profits on paper due to accounting rules but struggle with cash flow if revenue is tied up in unpaid invoices or if it has high upfront expenses. This is a common issue for growing businesses that extend credit to customers.
Which is more important: profit or cash flow?
Both are important, but cash flow is often more critical for survival. Profit shows long-term sustainability, while cash flow determines whether you can meet immediate obligations. Investors and lenders frequently look at cash flow to assess financial health.
How can I improve my business cash flow?
Some strategies include shortening invoice payment terms, negotiating better terms with suppliers, reducing unnecessary expenses, and keeping a cash reserve. Monitoring cash flow statements regularly can help you anticipate problems before they become serious.
Is cash flow the same as revenue?
No. Revenue is the total amount of money earned from sales, while cash flow measures the actual movement of cash in and out. A company may have strong revenue but weak cash flow if payments are delayed or expenses are too high.
Why do investors care about cash flow?
Investors view cash flow as a reliable indicator of financial health. Unlike profit, which can be influenced by accounting methods, cash flow shows the real liquidity available to grow the business and generate returns.