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Sunday, June 23, 2024



cash flows

Profit or cash flow?

When it comes to publicizing financial reports, all eyes will be on the profitability of listed businesses. However, those who understand more about corporate finance often agree with each other that “profit is an opinion, cash is a fact,” implying that caution must be exercised with reported profit/loss figures because one thing – profit – is subjective, while the other thing – cash flow – is objective. Profit is a subjective figure We all know that profit is the difference between revenue and cost, but understanding where revenue and expenses come from is not a simple matter for many people. First of all, it concerns how revenue is recorded. There are periods when revenues are recorded but the company’s responsibility has only been partially fulfilled, such as revenues advanced by partners. These revenues make the profit picture look brighter, but in reality, they are liabilities on the balance sheet. Next is the nature of revenue, i.e. whether it is genuine or not. There are revenues that are actually virtual, arranged with ghost companies (non-existent companies), or artificial revenues with related parties, or revenues obtained by using tricks to make customers buy more than necessary. These bogus revenues distort profitability. In […]
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Dealing with idle cash

In stark contrast with the liquidity crunch in late 2022 and early 2023 that forced banks to compete for funds by hiking interest rates,...

Real estate firms report profits despite negative cash flows

HCMC – Many listed property companies have released their first-half financial reports that showed they made profits despite their negative cash flows. The sharp spike...

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