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Essay / Research Paper Abstract
This 3 page paper considers why and how CFO’s have to balance profit making with cash flow in order to create a strong and viable company that maximises its’ profit potential while reducing opportunity costs and remaining liquid. The bibliography cites 2 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEcshproft.rtf
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Unformatted sample text from the term paper:
does not always result in cash flow, just as cash flow does not always result in profit. A business requires cash flow, there will be many ongoing expenses that
have to be paid, even if the business is theoretically profitable, if it does not have the cash flow to remain liquid and viable in the long term then there
may be issues regarding the future of the company. There are many measures that a company uses to assess the performance level, the profit margins may be very important to
the shareholders and the investors as well as others such as creditors. The long term future of any commercial organisations needs a profit to be realised. However not all companies
will be profitable all years, some may have a good solid performance others may fluctuate, for example, drugs companies will have notorious for volatile results, due to the time and
resources that are taken to develop a new drug. Profit is usually created as a result of investment, this means there will be a lag between the cost and
the revenue it creates, there is also likely to be a longer lag between the time the cost is incurred and the break even or payback period is reached. During
this time there will be other costs that the company has to pay, both overhead costs and variable costs need to be paid. If there is no cash flow they
cannot be paid and the company may not survive long enough to realise the potential profit. In reality a company will have more than a single investment, all at
different stages of development; they may include new product or service development, investments in ma faction plants and even service or outsourcing agreements. In all cases there is the
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