Profit to Cash Report

What is the Profit to Cash Report?

This report converts the Profit and Loss to a cash basis

What does the report show?
'CASH FROM SALES' reflects how the accounts receivable has been managed.

'CASH PRODUCTION COSTS' reflects the impact of how inventories and suppliers are managed.

'GROSS CASH PROFITS' is the difference between the ‘CASH FROM SALES’ and ‘CASH PRODUCTION COSTS’ items.

'Cash Operating Expense' reflects the cash spent on operating the business during the period.

'CASH AFTER OPERATIONS' represents the net cashflow before the entity has paid for:

• Income Taxes
  
  
• Interest on borrowings
  
  
• Repayment to shareholders
  
  
• Purchase on any fixed assets
  
  
• Repayment of any short term debt

'NET CASH AFTER OPERATIONS' is equal to ‘CASH AFTER OPERATIONS’ less ‘Income Taxes Paid’.

'Financing Cost' reflects the amount spent on Interest and Dividends

'NET CASH INCOME' is equal to the sum of all cash inflows and outflows through the business during the period.

'CASH AFTER OPERATIONS' is usually the most critical performance measure for management.

This result is important because it is generally totally under the control of management. If 'CASH AFTER OPERATIONS’ is negative, the entity would have to borrow to pay for its financing costs.