KNOWLEDGE BASE
Profit is an illusive thing
My business generates alot of cash, but why do I have this feeling that I am making a loss?
Some businesses receive cash faster than other businesses and dispense cash slower to suppliers than other businesses. This results in a cash-rich situation. However, being cash rich does not necessarily mean profitable as the cash that is payable for expenses might be more than money that is coming in as revenue. It might not be noticeable especially when there is a seasonal uptrend of revenues, but it will be felt when the opposite trend appears months later.



So it is important to understand if your business is profitable month by month by accurate accounting to prevent an over or under-statement of the real profit or loss.
AdminOutsourcing / 28 Nov 08, 11:03

Profit and cash in the bank often have little relationaship- it is common for expanding companies to be cash strapped, and declining comapnies to be cash rich. This is because, in an expanding company, profits are used to increase inventory, give customers more credit, and buy more equipment. The opposite can be true in a business which is reducing in size.
PWU / 4 Feb 09, 03:52
  

Home  |  People  |  Philosophy  |  Services  |  Knowledge Base |   Testimonials  |  Contact  Us  |  Links
All rights reserved © 2009 AdminOutsourcing.com