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For a company Cash Flow is more important or Profit?

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Question added by Muhammad Umair Arain , General Accountant , Heart Beat Medical Center & One Day Surgery LLC
Date Posted: 2015/03/20
Mark Angelo Damuag
by Mark Angelo Damuag , Financial Analyst , Evacare Management Consultancy Inc

Cash flow is more important than profit because if cash flow is manage correctly specifically its cash conversion cycle wherein the company have high turnover of sales and opt for faster collections of receivables/sales, and utilizing the credit terms (delayed payments of debt without compromising the name of the company), the company would surely positive cashflow and that follows the profit. Also, through cash flow, we could see how the cash of the company moved (being managed).

 

In profit, I don't think so because monetary amount reflected at its last item may have different hidden implications like uncollectible accounts, maybe fraud (in some cases) and others.

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