Profit vs Cash Flow: $400 Profit, $0 in the Bank

Profit vs cash flow, explained with one simple example: $400 in gross profit, but no cash in the bank yet. A quick financial intelligence lesson for entrepreneurs: buy $800 of stock, sell it for $1,200 on credit, and wait 30 days for payment. The sale creates gross profit before the customer’s cash arrives. Illustrative accrual-accounting example. Other expenses and taxes are excluded; gross profit is not net profit. Have you ever had a profitable month and a tight bank balance? Source: SEC — Beginners’ Guide to Financial Statements https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements Made with Framewright, my open-source video-production toolkit: https://github.com/markoblogo/framewright #CashFlow #BusinessFinance #Shorts