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Funding a business
Why Cash Flow Is Important?
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[QUOTE="Jasz, post: 214299, member: 61772"] Cash flow is a measure of the money coming in and going out of a business, while profit is a measure of profitability. Cash flow is important because it's the lifeblood of businesses, large and small. Without adequate cash flow, it can be difficult for a business to pay its bills, repay loans or purchase new inventory. In contrast, profit is the amount of income that remains after accounting for all expenses, debts and additional costs. It's what is left over when a company subtracts all of its expenses from its revenue and it isn't always an accurate indicator of financial health. Many small business owners don't truly understand the importance of cash flow. That's understandable. After all, it can be confusing to hear about "accounts receivable turnover" and "net profit margin," especially if you're just starting out. But here's the deal: it is important to understand what your cash flow is, how it works, and why you need to make it a priority. At its core, cash flow refers to the amount of money that is flowing into your business (through revenue), and the amount of money going out of your business (through expenses). In other words, how much money is coming in and how much is being spent? If you have more money coming in than going out, you have positive cash flow. If you aren't covering expenses with revenue, you're in negative cash flow. In either case, you need to understand why your cash flow is what it is. If you have positive cash flow, you need to know what's working for your business so that you can keep doing it—and maybe even do more! If your cash flow is negative, you need to know why so that you can fix it before things become dire. To get a better idea of whether or not your business has positive or negative outcome. [/QUOTE]
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Why Cash Flow Is Important?
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