Why is cash flow from operating activities negative and net profit positive?

UnderstandAccrual accountingand cash basis. As a simple example, if your costs are all cash costs of $10,000. Your sales revenue this month is 25,000 yuan, of which 5,000 yuan is collected

Net cash flow from operating activities: 5,000-10,000.

Net profit. 25000-10000 (Assuming income tax is not considered.)

Therefore, having a net profit does not necessarily mean that there is a positive cash flow.

Brief introduction. Cash flow is an important concept in modern finance, which refers to the cash inflow, cash outflow and total amount generated by an enterprise in a certain accounting period in accordance with the cash receipt and payment system, through a certain economic activity (including business activities, investment activities, financing activities and non-recurring items), that is, the cash and cash equivalents of the enterprise in a certain period.

The amount of inflow and outflow.

For example: sales of goods, provision of services, ** fixed assets.

recovering investment, borrowing funds, etc., to form the cash inflow of the enterprise; The cash outflow of the enterprise is formed by purchasing goods, accepting labor services, purchasing and building fixed assets, investing in cash, and repaying debts. Cash flow is a very important indicator to measure whether the business is doing well, whether there is enough cash to repay debts, and the liquidity of assets.

Reasons for negative operating cash flow: Understanding the accrual basis and the cash basis.

Operating cash flow adjusted "net profit" to "net cash from operating activities":

1) Deduction of gains and losses from non-operating activities (gains and losses from financing and investment activities): losses on disposal of fixed assets, intangible assets, and other long-term assets; loss on the retirement of fixed assets; financial expenses; Investment losses (minus gains). After deducting the "profit and loss from non-operating activities", the net profit is "net profit or loss from operating activities".

2) plus non-payment of operating assets: provision for impairment; provision for depreciation of fixed assets; amortization of intangible assets; amortization of long-term amortized expenses; Reduction in amortized expenses; Provision for an increase in costs.

Operating cash flow is negative, and the manipulation of the operating cash flow statement by enterprises is mainly through the following ways:

Falsifying the nature of cash flows, whitewashing the cash inflow from financing activities as cash inflow from operating activities, putting operating expenses into investment activities, and disguising cash inflow from investment activities as cash inflow from operating activities, etc.

In order to avoid the deterioration of the net operating cash flow in the annual accounting statements, the enterprise can allow the parent company or major shareholders to repay a large amount of accounts receivable at the end of the period or even pay the prepaid accounts in advance, and then return the funds to the parent company or major shareholders in various forms in the next period.

Discounting of bills receivable, discounting bills receivable is essentially a form of financing for enterprises, and cannot improve the profitability and quality of income of enterprises.

With the use of payables, payables were targeted when there was little room for improving receivables.

Summary. Hello! Core profit is negative and operating cash flow is positive for the following reasons:

There is no direct correlation between the positive and negative net cash flow and the loss of profit, profit. Net profit is a reflection of the company's operation. Net cash flow is a reflection of the cash outflow of a company during the year.

The profit of an enterprise is recognized on the accrual basis, while the cash flow is recognized on the cash basis, and the results may be inconsistent if the two are recognized on different basis. When the profit realized by the enterprise is negative, it means that the loss incurred by the enterprise operation, that is, the income obtained by the enterprise, can not make up for the costs, expenses, taxes and other expenses incurred by the enterprise, if the cash flow of operating activities is positive, it means that the cash inflow of the business activities of the enterprise exceeds the outflow of cash, the inflow of cash can have advance receipts, and there can also be tax refunds received, and the cash spent in the current period does not exceed the cash inflow, resulting in a positive cash flow from operating activities. This situation shows that although the enterprise has lost money, the capital chain has not been broken, and it can continue to operate, and finally achieve both positive.

Core profit was negative and cash flow from operating activities was positive.

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Hello! The reasons why the core profit is negative and the cash flow from operating activities is positive are as follows: the positive and negative net cash flow is not directly related to the loss of profit and profit.

Net profit is a reflection of the company's operation. Net cash flow is a reflection of the cash outflow of a company during the year. The profit of an enterprise is recognized on the accrual basis, while the cash flow is recognized on the cash basis, and the results may be inconsistent if the two are recognized on different basis.

When the profit realized by the enterprise is negative, it means that the loss of the enterprise's operation, that is, the income obtained by the enterprise, cannot make up for the costs, expenses, taxes and other expenses incurred by the enterprise, and the cash flow of operating activities is positive, indicating that the cash inflow of the company's business activities exceeds the outflow of cash, and the inflow of cash can have advance receipts, or the tax refunds received, and the cash spent in the current period does not exceed the inflow of cash, resulting in a positive cash flow from operating activities. This situation shows that although the enterprise has lost money, the capital chain has not been broken, and it can continue to operate, and finally achieve both positive. Hello, the above is yes, you can refer to it, I hope it will help you I wish you a happy life! 

Net cash flow from operating activities was negative, reflecting a decrease in accounts receivable.

The scope of business activities is very wide, as far as industrial and commercial enterprises are concerned, they mainly include: selling goods, providing labor services, operating leases, purchasing goods, accepting labor services, advertising, promoting products, paying taxes, etc.

Cash flow from operating activities is mainly related to the acquisition of net profit. The formation of an enterprise's net profit is related to the specific content of the profit, and the net profit in a certain period in the income statement does not necessarily constitute the cash flow generated by operating activities.

The role of net cash flow from operating activities:

1. The financial position reflected in the net cash flow of operating activities;

2. The means of manipulating the net cash flow of operating activities;

3. The cash flow structure is very important, and the distribution of the same cash flow in the same amount is different among operating activities, investment activities, and financing activities, which means different financial conditions.

The above content refers to - Encyclopedia - Net cash flow from operating activities.

Hello dear, under normal circumstances, the net cash flow generated by operating activities is greater than the net profit because the net cash flow generated by the company's operating activities is higher than the net profit in the same period in each period of the reporting period, mainly due to the characteristics of the testing industry. The investment in fixed assets in the testing industry is more, depreciation is an important part of operating costs, and the cash outflow in operating activities is less; The company's sales for different customers to adopt different credit policies, for large-scale, long-term cooperation, good credit customers to give different credit periods, for some less cooperation, smaller customers to take cash above is mine, I hope to help you, I wish you a happy life.

Summary. Hello, the information you are queried here is as follows: Net cash flow from operating activities is negative, indicating that its financial position has deteriorated.

However, the net profit is positive, indicating that although the enterprise has profitability, there is a large amount of inventory backlog or accounts receivable cannot be recovered, and it is unable to obtain cash flow that matches the profit. At this time, enterprises should consider financing on the one hand, and on the other hand, they should increase collection efforts or marketing efforts to speed up capital turnover.

What does a negative operating cash flow and a positive net profit mean?

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Hello, the information you are queried here is as follows: Net cash flow from operating activities is negative, indicating that its financial position has deteriorated. However, the net profit is positive, indicating that although the enterprise has profitability, there is a large amount of inventory backlog or accounts receivable cannot be recovered, and it is unable to obtain cash flow matching profits.

At this time, on the one hand, enterprises should consider financing, and on the other hand, they should increase their collection efforts or marketing efforts to speed up capital turnover.

Summary. Net profit = operating income - operating costs - income tax.

Cash flow can be cash inflow or cash flow, and it does not reflect profit.

For example, net profit is the result, while cash flow is the process. There is no comparison.

What is the difference between net profit and cash flow from operating activities.

Net profit = operating income - operating costs - income tax cash flow can be cash inflow or cash process, which cannot reflect the profit situation is like net profit is the result, and cash flow is the process. There is no comparison.

Dear, hello, according to the question you described, the answer of the workplace teacher is as follows: net profit = operating income - operating costs - income tax Cash flow can be cash inflow or cash process, which cannot reflect the profit situation For example, net profit is the result, and cash flow is the process. There is no comparison.

It is my honor to serve you, if you still have anything you don't understand, you can further describe your current problems in detail, or ask other questions related to the workplace, so that the teacher can answer you better and do better service, thank you for your understanding and cooperation!!