In the sentence below, two phrases or words are missing. Which two would you pick, from the list underneath?

Profit is______________, whilst cash flow is________________.

-An opinion
-A fact

As you may have guessed, the right answer is: Profit is a an opinion, whilst cash flow is a fact.

Why is that so?

A company’s profit after tax is quite a subjective figure. It’s calculated according to various accounting ideas and hypotheses, regarding expenses and revenues.

Cash flow, on the other hand, is an objective figure – a single figure – not influenced by personal interpretation.

More on cash:

What You Need to Know About Cash Flow

Five Things You Can Do to Help Your Business Get More Cash