25/04/2026
I always say this when explaining my favorite topic in Accounting, the Statement of Cash Flows:
Profit does not equal cash.
This is where accounting stops being theory.
🔹 Operating Activities
Where cash really comes from (or doesn’t).
Profit can be high… but if customers don’t pay, cash is low.
🔹 Investing Activities
Growth costs cash.
Buying assets (with high cash transaction) reduces cash today, even if profits look fine.
🔹 Financing Activities
When operations fall short, cash comes from funding, loans, capital, or investors.
You can have high total cash transactions during the year…
and still end with low cash in the bank.
Once people understand this, everything changes.
You can move your ₱1,000,000 twenty (20) times in a bank and call it ₱20,000,000 in cash transactions…
But at the end of the day, you (still) only have ₱1,000,000.
Profit does not equal cash.
That’s why the Statement of Cash Flows matters.
(Photo not mine, for Illustration purposes only).
