the.com/cashflow
profit is an opinion, cashflow is a fact you can't argue with at 5pm on payday.
means the actual movement of money in and out of a business or life, measured in real time, not on paper.
from emerged in mid-20th-century accounting to distinguish accrual profit from actual liquidity; became a boardroom obsession once companies kept going bankrupt while technically profitable.
profitable companies82 percent of business failures are cashflow, not profit, problems
three typesoperating, investing, financing flows tell different stories
negative cashflowamazon ran negative operating cash for years, on purpose
statement agecashflow statements only became mandatory (us gaap) in 1987
for instance
enron 2001 — reported profits, hid the cash was gone
wework 2019 — ipo collapsed once investors saw the burn rate
amazon 1997-2003 — prioritized cashflow over profit, letter to shareholders famous for it
small business default — leading cause of sme closures worldwide, per world bank data