Wick

Cash flow versus profit

Reading a Company

Profit is an opinion, cash is a fact

Accounting profit involves judgement calls — when to record a sale, how fast to depreciate equipment. Cash flow is simply what moved. A company reporting profits while cash drains out every quarter is telling you two different stories, and the cash one is usually right.

Check yourself

Profitable on paper but cash keeps leaving. That's…

  1. Normal and fine
  2. A warning worth understanding before buying correct
  3. Proof of fraud

There can be legitimate reasons, especially while growing fast. But it is the question to answer, not skip.

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