Net Income and Cash-flow are not the same.  This is why we often hear “My business is profitable, why am I always short of cash. The formula below shows the most common items that result in that difference.

Net Income (accrual basis)

Plus:

• Increase in Credit from Vendors (Accounts Payable)
• Increase in Income Received but Deferred for Financial Reporting
• Increase in Accrued Liabilities
• Depreciation / Amortization and other Non Cash Expenses

Less:

• Increase in Credit Extended to Customers (Accounts Receivable)
• Increase in Inventories

Equals Cash-flow from operations:

• Purchases of Furniture, Equipment or Real Estate
• Increase (Decrease) in Borrowings
• Equity Contributions

Net Cash-flow

If you could use help navigating your cash situation, a LauberCFO would be happy to set up a convenient meeting to discuss how we might assist you.