True, It is often impossible to forecast the cash flows from follow-on projects associated with a proposed capital investment.
However, it happens frequently for persons who are new to finance and accounting to mix up the two terms. Making important judgments about a company's performance and financial health requires an understanding that cash flow and profit are not the same thing. It is simpler for investors to determine if a profitable firm is a viable long-term investment based on its potential to remain solvent during economic downturns when they grasp the difference between profit and cash flow. Understanding how the phrases relate to one another can help business owners and entrepreneurs make crucial decisions, such as how best to pursue growth.
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