metrics explained

Cash Flow vs Operating Income: What's the Difference?

cash flow and operating income are two of the most important financial metrics that a business can track. They both give insights into a company's financial health, but they measure different things. Here's a look at the key differences between cash flow and operating income.

What is Cash Flow?

Cash flow is the movement of money in and out of a business. It's a measure of a company's liquidity, and it tells you how much cash a company has on hand to pay its bills. Cash flow is important because it's a key indicator of a company's financial health.

What is Operating Income?

Operating income is a measure of a company's profitability. It tells you how much money a company makes from its core operations, after deducting operating expenses. Operating income is important because it's a key indicator of a company's financial health.

Key Differences

The key difference between cash flow and operating income is that cash flow is a measure of a company's liquidity, while operating income is a measure of a company's profitability.

1. Cash Flow is a Measure of a Company's Liquidity

Cash flow is a measure of a company's liquidity. It tells you how much cash a company has on hand to pay its bills. Cash flow is important because it's a key indicator of a company's financial health.

2. Operating Income is a Measure of a Company's Profitability

Operating income is a measure of a company's profitability. It tells you how much money a company makes from its core operations, after deducting operating expenses. Operating income is important because it's a key indicator of a company's financial health.

Conclusion

Cash flow and operating income are two of the most important financial metrics that a business can track. They both give insights into a company's financial health, but they measure different things. Cash flow is a measure of a company's liquidity, while operating income is a measure of a company's profitability.

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