What is the difference between cash flow and profit?

Cash flow and profit represent distinct financial metrics for assessing a company’s performance. While profit gauges the overall financial success by measuring the surplus after settling all obligations, it results from deducting expenses from revenues. In contrast, cash flow delineates the net movement of cash into and out of a business, reflecting its liquidity and ability to meet short-term financial commitments. While profit highlights long-term viability, cash flow underscores the immediate financial health, both serving as vital indicators for evaluating a company’s financial standing.

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